The recent rally in the price of gold seems to be characterized by a structural shift toward physical gold. An offshoot of this shift is that gold miners may finally be able to reverse their underperformance relative to the commodity. As such, there is the potential to build a successful pairs trade between the SPDR Gold Trust (NYSEMKT:GLD) and Market Vector Gold Miners (NYSEMKT:GDX).
In the video below, Fool.com contributor Doug Ehrman discusses the advantages, risks, and mechanics of building this type of pairs trade in order to capitalize on the potential structural changes taking place in the gold market.
Motley Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
Why the Price of Gold Kept Climbing in 2017
Advances for the yellow metal were still modest compared to the stock market, but things worked out better than expected.
Why Are Stock Valuations So High Right Now?
Two promising investment options for investors in a pricey market.
Roundtable: Why I Won't Buy Gold
Thinking about buying gold? It's not the right investment choice for most people.