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ETFs tracking gold miners are rallying, after burning through billions in investor cash over the past several years.Akos Stiller/Bloomberg

Investors in exchange-traded funds tracking gold mining companies just can't seem to get it right. After years of trying – and failing – to call a bottom in the miners, investors are scared to buy into what is turning into the rally of a lifetime for ETFs tracking these once left-for-dead stocks.

Despite returns of over 65 per cent in a year where the S&P 500 is up 4 per cent, gold miner ETFs have seen half a billion in outflows. That is practically unheard of as inflows and performance are usually highly correlated when it comes to ETFs. Gold miner ETFs it seems, are the rare exception.

This atypical trend is best exemplified in the Market Vectors Gold Miner ETF (GDX), which has $6.6-billion (U.S.) in assets and is up 66 per cent year to date but has seen $514-million in outflows. This oddity is no doubt connected to the billions that were poured into GDX over the past several years as investors bloodied their hands trying to catch a falling knife. GDX had lost 75 per cent in the three years leading up to 2016.

If you subtract the lifetime of inflows from its assets today, GDX has burned through about $4.5-billion in cash.

Throw in a few of the smaller gold miner ETFs as well, add it all up and such funds have effectively burned through about $8-billion in investor cash. That's more than any other industry, sector, or category.This explains why such an intense rally can coincide with outflows as many burned investors are getting out and trimming losses before they get burned again.

There is one gold miner ETF that is seeing some significant inflows, however. The only problem? It's the Direxion Daily Gold Miners Bear 3X Shares (DUST), which is down 88 per cent.

Meanwhile, the Direxion Daily Junior Gold Miners Index Bull 3X Shares (JNUG) has put in a jaw-dropping return of 294 per cent (along with outrageous volatility that is 10 times that of the S&P 500).

JNUG is returning four times the returns of its underlying index due to the compounding effect of resetting leverage daily into a upward-moving market. No ETF has ever returned more than 300 per cent in a year. Yet still, JNUG has still seen $83-million in outflows.

It remains to be seen whether some of these burned bottom-callers will be drawn back in by this rally, but for now, they aren't touching it with a 10-foot pole, or an ETF.

Eric Balchunas is an exchange-traded-fund analyst at Bloomberg News.

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