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Pairs Trade: Gold Versus Gold Miners ETF

This article describes a strategy wherein the SPDR Gold Trust ETF (SYMBOL: GLD) and the VanEck Vectors Gold Miners ETF (SYMBOL: GDX) are traded as pairs with one held long, the other short in equal dollar amounts. This trade presents an interesting challenge as the volatility of the two ETFs can be radically different at times, and gold can trend for long periods of time, making reversion to mean strategies difficult to implement.

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by Steve Auger