Van Eck’s Market Vectors Junior Gold Miners ETF — also known as the GDXJ — is overheated with assets jumping 60% to over $5 billion this year and according to active fund manager Frank Holmes, investors should be careful.

We wrote about the coming rebalancing of the GDXJ in an article last week titled GDXJ Rebalancing to Leave Smaller Gold Stocks in the Cold.

Holmes explains,

“The problem is massive capital is going into the GDXJ and then the index changes.”


Change Coming for Junior Gold Miners ETF

Holmes explained that the index is expanding its scope into larger miners, which is hurting the small cap gold stocks ‘for no reason.’ As for the gold price, Holmes said investors should expect more volatility ahead of the French election over the weekend. With Le Pen and Macron winning the first round, gold sold off. The reason for gold’s weakness is that most assume pro-EU Macron will beat anti-EU Le Pen.

VanEck Vectors Junior Gold Miners ETF the GDXJ was down 2.32% Monday to $33.74. The rebalancing of this ETF not expected until June.