ETF Battles: GLD vs. GDX, which gold ETF wins? - YouTube

- Gold bugs are among the most annoying demographic within the investment universe.

Right before silver bugs, pallidium bugs, and platinum bugs, especially the ones who

insist on taking physical delivery.

Go back to eating your canned potatoes, chumps!

Hi there, everybody, I'm Ron DeLegge.

Welcome to ETF Battles, where it's okay to talk smack, so long as you can defend yourself.

Today's ETF Battle is smack dab centered in the middle of the gold market.

We've got the SPDR Gold Shares, ticker symbol GLD, versus the Market Vector's Gold Miners

ETF, ticker symbol GDX.

Both ETF's are among the most popular gold related ETFs by assets and trading volume.

By the way, I'm 96% confident that cryptocurrency enthusiasts are gonna hate today's matchup,

which makes it all the more fun.

Helping us to judge this matchup is Dave Kreinces with ETF Portfolio Management and Mike Akins

with ETF Action.

Judges, welcome to the program, great to have you with us.

- Thanks, Ron.

- Thanks for havin' me.

- So the four battle categories are gonna be: Cost, Yield, Performance and get this,

a Mystery category!

Agatha Christie in the house.

So I've got my ETF Battles scorecard, it's right here.

And as you can see, it's blank.

We're gonna fill it out and we're gonna go through these four battle categories one at

a time.

Each of you are gonna pick GLD or GDX as the winner, in each respective battle category

and you've got 30 seconds to do that.

Let's begin with the first battle category, Cost.

Dave, you've got 30 seconds, go.

- So on cost neither of these gold ETFs are that expensive, 40 basis points for the gold

metal GLD or 53 bps for the miners index, so at that nominal 13 basis point difference

it's really a factor of which you've rather own.

It's rather nominal given the difference in what you're buying, so on cost it's somewhat

irrelevant, but technically the GLD is a little cheaper.

- Let's move on to Mike, what's your take?

- GLD all the way.

Anybody that's ever tried to buy gold and store it, knows how expensive it is to get

it delivered and pay for it.

GLD is the physical gold, it's just held in the vault for you, so GLD is a way to own

the metal.

It's by far cheaper.

- Excellent analysis, well done.

Let's move on to the next battle category which is Yield.

Let's go with Mike.

- Yeah, I'm not sure what that means, Ron.

Gold doesn't yield unless you're talkin' about how much yield it takes to lift it or something,

and gold miners pay very little dividends, so I pass.

- So split decision?

- Split decision.

- Okay, Dave what's your take on this battle category of Yield?

- I agree, in this battle it's really about performance.

Yield and cost are somewhat irrelevant for both of these ETFs.

All right, well then let's go to the next battle category, which is Performance.

Dave, what's you take on this one?

- You know over the past five years, the Miners GDX has performed much better than the Metal

GLD.

But the reverse is true over the trailing 10-year period, which basically leaves you

a little bit frustrated with both of these ETFs.

They've got very subpar low single-digit returns, or negative returns.

So at the end of the day, neither of them have performed very well and for protection

investors have done much better in the longterm treasury bond ETF/TLT, so neither of these

ETFs are very attractive for performance, so I would pass on both of them frankly.

- So split decision in terms of performance?

- Sure.

- Okay.

- Even though they're both positive this year, they're both train wrecks over the past decade.

And long-term Treasuries were much better protection, so until long-term Treasuries

stop providing better protection, both of these trends are unattractive.

- Okay, Performance, who wins the battle here, Mike, versus GLD and GDX?

- It's a tough call, but really it depends on what you're trying to do.

I think GLD from a perspective as a diversifier within your portfolio, wins across the board

on performance.

GLD from a trader's vehicle is going to win, so I'll give it to GLD just as a broader positioning,

but looking forward and when we get to the Mystery chart I might change my mind.

- Okay, well that brings us to the final battle category, and this is new for our program:

Mystery category.

This is where our judges get to choose the Mystery category, whatever factors that are

crucial to their argument.

And it could be a wildcard in determining the final winner of today's battle, so let's

take the Mystery category, Mike, who is, or tell us more about the Mystery category here.

- Yeah, so I'm going to look at risk stats and look at corelation, beta, up and down

capture, GLD versus GDX.

And if you look at that period time when you're looking, three-year stats, five-year stats,

10-year stats, what you find is GDX and GLD are highly correlated, so they both move very

close in tandem, but GDX comes with a very high upside capture.

On 10-years it's like 500 basis points.

500% on a, on three years it's more like 300.

But the downside capture's just as ugly, so I think you have to look at it from perspective

as thinking GDX is a levered play on gold, and GLD is a diversifier within a portfolio,

so if you're bullish on gold going up and you're playing it as a trade, GDX is an excellent

way to capture more upside.

But if you're using it as a diversifier in the portfolio, it's GLD.

In this current environment, given where GLD has gone and we're coming up on 10-year highs,

all time highs for GLD, I think GDX has some room to play catch up and I like that higher

beta play.

- So GDX is your Mystery category winner?

- Yes.

- Excellent.

And that's correlation by the way.

Was that correlation?

- It's a risk stats in general: correlation, beta, up/down capture.

- Got it.

So it's a multi-mystery category is what I'm hearing.

Let's move on to Dave, what's your Mystery category?

- I would make the Mystery category, Portfolio weighting, from the do we care perspective.

Because gold in most diversified portfolios for people who love gold, is still probably

a sub two-to-five percent allocation.

So it's generally gonna be a token allocation to most investors, if at all.

And given the underperfomance of commodities, and gold in general, it really doesn't have

a place in our client portfolios.

I think it's nice when people wanna talk about the range of asset classes to choose from

but if people are going into gold for protection, long-term Treasuries have been much better

for that.

And gold hasn't given you a great return for a long time.

So I think in most portfolios gold has a zero allocation whether it's the miners or the

metal.

- So what is your Mystery category winner?

- Overall for this battle, I mean if the Mystery category, I'd say the winner is TLT, Long-term

Treasuries--

- That's a totally unrelated ticker!

You've gone bonkers!

- Well you know what?

That's what investors need to hear.

They need to hear how they're gonna protect themselves.

And when you see the protection in longterm treasuries, people need to hear it.

- Listen, we started this episode pissing off gold bugs, and this is gonna really set

them afire.

Hearing long-term US Treasuries.

- I've gotta jump in a little on those long-term Treasuries.

- Sure.

- They've killed it, it's been awesome.

- They've killed it.

- They've done nothing but that convexity can bank both ways.

- People have been saying that--

- About long-term Treasuries.

- People've been saying that for a long time and interest rates can't go down forever,

but in the meantime, the best protection has been longterm treasuries and it's been a very

underappreciated tool for investors.

And it does not get enough recognition for what it's done for protection.

- Well I think we may have a future battle in TLT versus GLD, but for the purposes of

this particular battle, I'm gonna have to score this.

My scorecard, I mean this to me looks like a very evenly matched battle.

According to my scorecard, I'm gonna have to call this a split decision, guys.

- Wow!

- This was a split decision on Yield.

A split decision pretty much on the Mystery Category.

But as far as playing these particular themes or acid classes like precious metals, as well

as equity linked precious metals, this is certainly, you can't get better than these

two tickers.

But again, this is a split decision.

And we have no overall winner, so I wanna thank are judges for helping us score this

particular battle.

And it's pretty clear that these two ETFs are pretty evenly matched.

Well that does it for this round of ETF Battles.

Lots of punches were thrown, some of them hit, some of them didn't, but the important

thing is we all survived.

Congratulations everybody, we're alive!

Well thank you Dave and Mike for doin' a fine job at judging this matchup.

Before signing off, which ETF Battles would you like to see in our next episode?

Post your thoughts in our YouTube comments section, or hit us up on Twitter at: etfguide.

Be sure to: #ETFBattles Thanks for watching, I'm Ron Delegge, and until next time, watch

the battle before you invest, right here on ETFguide TV.