Worried About Rising Inflation? Check Out This Top ETF

Here’s why those worried about rising inflation may want to turn their attention to the VanEck Vectors Gold Miners ETF (TSX:GDX) right now.

| More on:
sad concerned deep in thought

Image source: Getty Images

Inflation concerns are real right now. In Canada and around the world, inflation levels not seen in three or four decades are now taking hold. For long-term investors looking for capital preservation, stocks can be a great way of protecting one’s savings from the “inflation tax” that’s underway.

However, most interest rate-sensitive stocks are likely to underperform in this environment. For ETFs paying out significant yields, this goes double.

However, among the ETFs I’m looking at to combat inflation, VanEck Vectors Gold Miners ETF (TSXV:GDX)(NYSE:GDX) is one I think is worth considering. This portfolio of gold miners is one I think has incredible upside, particularly for those concerned about inflation.

Let’s dive into why this ETF may be a top investment for those worried about inflation heating up further.

Gold miners still represent a great inflation hedge

Gold, as an inflation hedge, remains one of the top picks for many long-term equity holders. Should the U.S. dollar depreciate in value as a result of this inflation, gold should get a pickup. Yes, rising interest rates are broadly bearish for gold. However, overall inflation is likely to outpace interest rates for the time being — a bullish catalyst for the yellow metal.

Perhaps the most vital metric that investors should consider with VanEck Vectors Gold Miners ETF, or any gold miner, is the relative comparison of gold bullion and gold mining equities over time. Right now, this valuation gap is near multi-decade highs.

I think that gold miners represent excellent leverage to the price of gold at reasonable valuations. For investors looking at this space, this ETF is a great option. That’s because this exchange-traded fund is well diversified.

From mega-cap to small-cap, the VanEck Vectors Gold Miners ETF offers an array of gold miners across the spectrum. This ETF covers all my favourite gold miners and a few top-quality silver producers. Accordingly, investors looking for top-notch capital-appreciation upside alongside best-in-class diversification can’t go wrong owning this name.

Bottom line

Launched in 2006 by Van Eck, the VanEck Vectors Gold Miners ETF has net assets worth approximately $12 billion. This makes it one of the biggest and most broadly traded gold miner ETFs. 

The portfolio of this exchange-traded fund comprises 57 holdings. Of these, many are among the planet’s biggest gold producers. Those looking for size and scale get it with this ETF.

Personally, I think rising inflation is a bigger risk to the markets than many are making it out to be. Accordingly, this ETF is one I have my eye on right now. For long-term investors looking to battle inflation, I’d certainly recommend giving this ETF a look.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

growing plant shoots on stacked coins
Dividend Stocks

Here Are My Top 5 Dividend Aristocrats to Buy Right Now

Now is the time to buy these top five dividend aristocrats at their two-year low before they recover to 2021…

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

Is NorthWest REIT Stock the Best High-Yield Dividend for You?

NorthWest REIT (TSX:NWH.UN) offers a substantial dividend, but exercise caution with this riskier stock.

Read more »

Dividend Stocks

Income Stocks: A Once-in-a-Decade Chance to Get Rich

These two income stocks are among the best on the TSX for those seeking consistent total returns over a long-term…

Read more »

dividends grow over time
Dividend Stocks

3 Top Royalty Stocks With Dividend Yields of up to 9%

When it comes to secured dividends, these three are top notch. Each offers exposure to royalties through franchising and ultra-high…

Read more »

Golden crown on a red velvet background
Dividend Stocks

This 8 Percent Dividend King Pays Out Every Month

Canoe EIT Income Fund (TSX:EIT.UN) is a staple for monthly income investors.

Read more »

sad concerned deep in thought
Dividend Stocks

Should You Buy Fortis or TC Energy Today?

These stocks have great track records of dividend growth.

Read more »

Dice engraved with the words buy and sell
Dividend Stocks

A&W Stock: Buy, Sell, or Hold?

Shares of A&W (TSX:AW.UN) stock popped by 20% after a major corporate restructuring announcement investors love.

Read more »

Payday ringed on a calendar
Dividend Stocks

3 Monthly Paying Dividend Stocks With Handsome 7% Dividend Yields

Given their healthy cash flows and high yields, I am bullish on these three monthly-paying dividend stocks.

Read more »