Market Vectors Gold Miners ETF (NYSEARCA:GDX) can do precious little by reverse splitting ETF’s
The New York-based ETF issuer Market Vectors Gold Miners ETF (NYSEARCA:GDX), known for its suite of unique bond ETF’s and emerging markets announced reverse-splits for 7 of its ETFs. Out of these, three of the funds that will be reverse split are the single-country emerging markets ETFs. Three of the balance 4 are equity-based commodities funds. According to a statement issued by GDX, 1 July 2013, at market opening will be the split effective-date.
Any investor who holds gold or silver equities will be very well acquainted with the manner in which both the precious metals have been struggling over the last one year. This of course is a euphemism as it seems like the selling just doesn’t want to cease and its nothing less than slaughter-time and losses have been compounding and added to the highs that were experienced in 2012 fall.
It is important to note that neither GDX nor NUGT will be affected by the split. However, some other Market Vectors products will be adjusted too. The reverse split will be conducted at a 1:4 ratio. It will apply to shareholders on record at market close on 28 June 2013 and will commence trading at the new, adjusted price on 1 July 2013. There will be no change in the ticker symbol of the fund. Via the reverse split, the price per fund share will rise with a proportionate drop in the number of shares outstanding. In a 1:4 reverse split, every four pre-split shares that are held by any shareholder will lead to receipt of 1 post-split share. This will be priced four times higher than the actual value of the share that had been pre-split share
Reverse Share Splits Are not always good news
Though reverse split shares are valued higher that the original shares, that are not always good news. Companies generally issue reverse share splits in order that their NASDAQ or NYSE listing be maintained. It is an easy and quick method of maintaining compliance. A reverse stock split generally indicates that there are a numerous not-too-favorable things occurring at the company. Somehow, no matter which way you look at it, for gold and silver investors, it’s like no news is good news.