Mining ETFs in 2024: Five Industry Funds Worth Watching for Risk-Tolerant Investors

The materials sector has long been underestimated by mainstream investors, yet it presents tactical opportunities for those willing to embrace volatility. Mining ETFs stand at the center of this sector, offering exposure to everything from precious metals to lithium and steel. Unlike traditional materials funds that favor chemical manufacturers, mining-focused ETFs deliver more concentrated exposure to specialized segments. However, investors must recognize the multifaceted risks: currency fluctuations, geopolitical tensions, international trade policies, and commodity price dynamics all play decisive roles.

The Current Mining ETF Landscape

Mining ETFs are inherently more volatile than broad market indexes. As of recent trading, many have experienced notable pullbacks despite underlying commodity strength. This disconnect between spot prices and mining equities creates both risks and opportunities for tactical traders. The key challenge: mining stocks don’t always move in tandem with commodity prices, and they frequently overextend declines when prices weaken.

GDX: The Gold Mining Heavyweight

The VanEck Vectors Gold Miners ETF remains the largest and most recognizable gold mining fund, charging a 0.53% expense ratio ($53 per $10,000 invested annually). Despite gold’s resilience—with spot prices down just 2.68% recently—GDX has plummeted 7.78%, now threatening to break below its 200-day moving average.

This divergence reflects a broader psychological challenge facing gold miners. The sector faces technical headwinds, sentimental pressure, and fundamental uncertainties that have prompted significant capital outflows. Year-to-date, investors have withdrawn approximately $1.36 billion from GDX, signaling diminished enthusiasm despite gold’s traditional safe-haven appeal.

XME: The Diversified Mining Play

The SPDR S&P Metals & Mining ETF takes a different approach with an equal-weight strategy across 29 holdings, primarily steelmakers. With a competitive 0.35% expense ratio and nearly 13 years of track record, XME provides broad exposure to aluminum, coal, copper, gold, precious metals, silver, and steel sub-industries.

The fund’s portfolio has benefited from tariff policies supporting domestic steel producers, though this advantage has largely been priced in. With three-year annualized volatility reaching 27.30%—roughly 1,200 basis points above the S&P 500 Materials Index—XME demands experienced risk management. It’s a suitable vehicle for tactical traders with elevated risk tolerance, holding $433.35 million in assets.

LIT: The Electric Vehicle Connection

Global X Lithium & Battery Tech ETF bridges traditional mining and emerging technology trends. Though technically classified as a thematic fund, several of its 39 holdings actively mine and produce lithium. The fund has endured volatility, declining 15% over the past 12 months, yet it captures one of the most powerful secular shifts: the global electrification of transportation.

Lithium demand reflects this transformation directly. Industry data shows that as of early 2019, lithium carbonate equivalent deployments in electric and hybrid vehicles surged 76% year-over-year. Among all EV battery cathode materials, lithium recorded the greatest gains. With electric vehicles approaching cost parity with traditional automobiles within years, LIT positions investors at the epicenter of structural market growth. The 0.75% expense ratio is reasonable given the fund’s long-term tailwinds and exposure to crucial energy transition themes.

PSCM: Materials Exposure Without Dedicated Mining Focus

The Invesco S&P SmallCap Materials ETF offers a hybrid approach. While not exclusively dedicated to mining, its 34 holdings derive more than 17% of exposure from mining companies engaged in raw materials production including metals, chemicals, construction materials, and wood products.

The portfolio splits evenly between value and growth characteristics, with roughly 36% and 29% respective weightings. By concentrating on smaller-cap materials producers, PSCM has outperformed large-cap peers by nearly 800 basis points year-to-date. The 0.29% expense ratio makes it an economical entry point for investors seeking mining exposure without the volatility commitment of dedicated mining funds.

SIL: Silver’s Industrial Underperformance

Global X Silver Miners ETF mirrors many gold mining dynamics—but with concerning divergence. Silver has declined 11% recently despite a predominantly strong global economy, which should theoretically support industrial demand that accounts for roughly half of all silver consumption.

The problematic scenario: some analysts contend the silver market lacks a genuine supply deficit, questioning why prices haven’t held firmer. For seven consecutive trading sessions ending late April, SIL closed lower on six days and now trades approximately 5.50% below its 200-day moving average. The 0.65% expense ratio doesn’t compensate for current technical weakness. SIL merits monitoring but represents a speculative position rather than a defensive holding in the current environment.

Strategic Takeaway

Mining ETFs demand conviction and risk tolerance. The sector’s exposure to macroeconomic factors—currency strength, trade policies, geopolitical events—means rewards come with substantial volatility. GDX offers the broadest exposure to gold mining; XME provides diversified metals access; LIT captures the lithium boom; PSCM delivers small-cap optionality; and SIL presents a speculative silver play. Each serves distinct portfolio objectives for investors comfortable embracing mining sector complexity and cyclicality.