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Market Overview

The 3x Gold Trade Is Back

The 3x Gold Trade Is Back

Prior to March, traders who wanted to go long or short gold miners with 3x leverage had a number of options. 

But in the midst of the market volatility that month, Direxion reduced the exposure of its four leveraged gold funds—Direxion Daily Gold Miners Index Bull 2X Shares (NYSE: NUGT), Direxion Daily Gold Miners Index Bear 2X Shares (NYSE: DUST), Direxion Daily Junior Gold Miners Index Bull 2X Shares (NYSE: JNUG), and Direxion Daily Junior Gold Miners Index Bear 2X Shares (NYSE: JDST)—from 3x leverage to 2x leverage. 

This left traders without a similar product that provided 3x or -3x leverage to gold.

Nine months later, two new products have stepped in to fill the void. The MicroSectors Gold Miners 3x Leveraged ETN (NYSE: GDXU) and MicroSectors Gold Miners -3x Inverse Leveraged ETN (NYSE: GDXD), launched on Dec. 3, offer +3x leverage and -3x inverse leverage linked to gold mining stocks. 

GDXU and GDXD are exchange traded notes linked to the S-Network MicroSectors Gold Miners Index (MINERS). The index, launched on August 20, is a market cap-weighted index designed to track the performance of two exchange traded funds – the VanEck Vectors Gold Miners ETF (NYSE: GDX) and the VanEck Vectors Junior Gold Miners ETF (NYSE: GDXJ).  

The idea is by tracking the daily performance of GDX and GDXJ, the MINERS index will create a comprehensive gold mining benchmark.

“The underlying GDX and GDXJ ETFs represent the benchmarks for senior and junior gold mining companies,” said Scott Acheychek, president of REX Shares, the firm that oversees the products. 

The ETNs are senior, unsecured obligations of the Bank of Montreal, and attempt to deliver 3x and -3x the daily return of the index. The ETNs reset daily so traders should be aware that their performance can differ over longer periods of time.


Related Articles (GDXJ + GDXD)

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Posted-In: MIcroSectors Rex SharesNews Specialty ETFs New ETFs Commodities Markets ETFs

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