This catalyst will keep the gold miners shining, traders say

Even as the gold miners ETF hits a three-year high on Thursday, two traders would still bet on the product due to ultra-low interest rates.

"I do think there's more to come" for the gold miners, said Brian Kelly of Brian Kelly Capital.

Investors are putting their money in gold these days, Kelly said Wednesday on CNBC's "Power Lunch," because of negative interest rates around the world.

When interest rates are high, gold looks worse in comparison, since the metal doesn't yield anything. But when rates are negative, a nonyielding asset actually looks like a more reasonable investment.

"The low- to negative interest rates that we're seeing right now are driving precious metals higher," agreed Dennis Davitt of Harvest Volatility Management, Wednesday on "Power Lunch."

Kelly and Davitt see these gains ahead for gold miners despite worldwide struggles in the metals and mining industry.

"Roughly 10% of global gold mines … are running at a loss," according to a recent Deloitte report on issues facing the industry this year.

So far this year, the GDX has risen about 130 percent. On Thursday morning, the ETF rose to the highest level since April.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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