The GDXJ junior gold miners ETF currently owns big stakes in many of the ASX gold stocks. These holdings are generally 15% or more of the shares on issue. The qualification for a stock to be added to the GDXJ is that it must have a market cap of US$150M and it must have traded US$1 Million per day on average for the last quarter and the two quarters before that. It does not need to be producing gold presently to be added.
GOR definitely fits the market cap requirement but is borderline on turnover. My analysis suggests trading volume has averaged approximately US$700K per day on the ASX this quarter and more like US$800K per day the previous two quarters. Now the thing is that these figures do not include Chi-X volumes which are generally anywhere from 10-25% of the ASX. I don't have this data but I think if it were included it would be borderline for the required US$1 Millon per day turnover.
These turnover numbers are somewhat flexible to keep the market guessing a bit.
The last couple of days has seen big volumes in GOR and I reckon this could be related to pending release of the GDXJ additions/deletions list which is announced Friday night Australian time. The rebalance itself will take place next Friday (17th).
Note that Van Eck hold GOR in its non-ETF managed gold fund, the INIVX, and previously held more than 5% of the GOR shares through this fund.
There would be big demand from the GDXJ of something like that 60M shares and this could cause sizable swings in the share price. Some broker research I have seen on this topic does not list GOR as a possible addition to the index so if it happens I think the market may be caught off guard and the share price react strongly.
On Monday morning it will be obvious if it has been added.
GOR Price at posting:
52.3¢ Sentiment: Buy Disclosure: Held
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