GDX and SIL Provide Indirect Exposure to Gold and Silver -- But With a Few Key Differences

The VanEck Gold Miners ETF(NYSEMKT:GDX) stands out for its lower cost, larger assets under management (AUM), and stronger recent performance. The Global X Silver Miners ETF(NYSEMKT:SIL), on the other hand, appeals to those seeking a more direct play on silver and a higher yield.

Both ETFs target investors interested in mining equities, with SIL focused on silver miners and GDX providing global gold miner exposure. Here’s how they stack up on cost, performance, risk, and portfolio construction.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

GDX is more affordable on fees, charging 0.51% annually versus SIL’s 0.65%. However, it also delivers a lower payout, with a 0.53% dividend yield compared to SIL’s 1.17%.

Performance & risk comparison

What's inside

GDX is built for investors seeking broad gold mining exposure, tracking 52 holdings across global gold producers. Its top positions are Agnico Eagle Mines, Newmont, and Barrick Mining, each of which represents a relatively small slice of assets. The fund has a long track record of 19.5 years and maintains a strict basic materials focus.

SIL, in contrast, delivers pure-play silver miner exposure, with 39 holdings and a portfolio heavily weighted toward companies like Wheaton Precious, Pan American Silver, and Coeur Mining. Both funds are highly concentrated in basic materials, but SIL’s silver tilt may appeal to those with a bullish view on that metal.

For more guidance on ETF investing, check out the full guide at this link.

Foolish take

GDX and SIL both provide indirect exposure to precious metals by containing gold- and silver-mining companies. Both are highly targeted funds focused solely on one sector of the market, which can be both an advantage and a risk.

With only a few dozen holdings each -- all of which are from a very niche sector of the market -- these ETFs are less diversified than many other broad-market funds. That increases risk, but it can also be a smart way to zero in on a highly specific set of stocks.

Between these two ETFs, GDX has been the higher performer. It's earned higher total returns over the past year and five years, and with a less severe max drawdown, it also hasn't experienced as much price volatility as SIL. It also has a lower expense ratio, helping investors save money on fees.

Where SIL shines, however, is its higher dividend yield. SIL's yield is over twice that of GDX, which can be a major advantage for income investors. Also, because SIL has a smaller portfolio and is highly targeted toward silver, it can be a smart option for those who specifically want access to that metal.

Glossary

ETF: Exchange-traded fund; a pooled investment that trades on stock exchanges like a single stock.
Expense ratio: Annual fee, expressed as a percentage, that a fund charges to cover operating costs.
Dividend yield: Annual dividends paid by a fund or stock, shown as a percentage of its price.
Beta: A measure of an investment's volatility compared to the overall market, typically the S&P 500.
AUM: Assets under management; the total market value of assets a fund manages.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a period.
Basic materials: Sector including companies that produce raw materials like metals, chemicals, and mining products.
Holdings: The individual stocks or assets that make up a fund's portfolio.
Pure-play: A company or fund focused exclusively on a single industry or commodity.
Total return: Investment gain including price changes and all dividends or distributions, assuming reinvestment.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.