Gold miners have been extremely volatile as of late as gold
prices have wildly oscillated. And since miners often trade as a
more explosive play on the underlying metal, there have definitely
been some big moves in the miner ETF world recently.
This is particularly true when investors look to the leveraged gold
miner ETF space, with products like
Daily Gold Miners Bull 3x Shares (
Daily Gold Miners Bear 3x Shares (
. These two products-which look to take 300% daily moves of their
underlying NYSE Arca Gold Miners Index-have seen truly astounding
performances lately with DUST adding 41% in the past month, and
NUGT losing a similar amount over the past 30 days (see
all the leveraged equity ETFs here
Clearly, big moves can happen in leveraged products targeting this
space, making ETFs like this very interesting plays for short term
traders in the metals space. And now, given the volatility and the
heavy trader interest, it appears as if Direxion isn't stopping at
just the 'regular' gold miners, and that it is now expanding its
leveraged and inverse lineup to the junior gold miners space too.
Junior Gold Miners in Focus
Stocks in this segment are even more volatile than their large cap
counterparts, and can see even bigger moves when gold prices are
either soaring or sliding. This makes these stocks great choices
for those seeking big bang for your buck plays on a move in gold.
Currently, the space is dominated by the
Market Vectors Junior Gold Miners ETF (
, an unleveraged ETF that has about $1.75 billion in assets, and
sees volume of about one million shares a day. This fund now has
some leveraged and inverse counterparts though, as Direxion has
just released its
Daily Junior Gold Miners Index Bull 3x Shares
Daily Junior Gold Miners Index Bear 3x Shares
These ETFs look to act as daily rebalancing cousins to GDXJ,
tracking the same index but using 300% leverage. These give JNUG
and JDST exposure to about 70 companies, with a focus on small caps
3 Small Cap Stocks Leading the Market Higher
In terms of national exposure, Canada takes up nearly 60%, while
Australia (20%), and the U.S. (9%) round out the top three
For individual companies, no single firm makes up more than 6% of
assets, while LionGold, Argonaut Gold, and Torex Gold Resources
account for the current top three.
Both funds look to have net expense ratios of 95 basis points a
year, putting them in line with many other leveraged and inverse
ETFs, but quite a bit pricier than GDXJ's 54 basis point cost per
How Do They Fit in a Portfolio?
These ETFs could be interesting picks for short-term traders who
want to make a directional bet on small cap gold miners. Both JNUG
and JDST look to have extreme levels of volatility, and huge moves
should be expected in the funds (also see
Why I Hate Volatility ETFs
These ETFs shouldn't be used by long term investors though, as the
daily rebalancing and triple leverage make these inappropriate for
buy-and-hold types. Additionally, bid ask spreads may be a bit wide
in the beginning, especially if volume levels and assets are low
Either way, these two represent more solid options in the gold
mining space, and could be invaluable ways for traders to get a
different type of exposure in the market.
"At a time when a growing number of investors are expressing
interest in exposure to companies engaged in the exploration and
production of gold, we are offering liquid exposure to this sector
with the benefit of added leverage," said Eric Falkeis, President
in a press release
. "These two Funds are designed for traders that wish to take a
bullish or bearish stance on the gold-mining industry."
Both NUGT and DUST have been very popular with investors, as both
see millions of shares move hands every day. These have undoubtedly
attracted interest thanks to their huge moves, and their ability to
play off of gold in a big way (see
Time to Buy Covered Call Gold and Silver ETFs?
Both JNUG and JDST look to do the same thing, and if anything, will
probably have bigger moves than their large cap-focused
counterparts. This could make them very popular in short order,
though buyers should definitely use extreme caution before diving
into either one of these geared ETFs.
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DIR-D GM BR 3X (DUST): ETF Research Reports
MKT VEC-GOLD MI (GDX): ETF Research Reports
MKT VEC-JR GOLD (GDXJ): ETF Research Reports
DIR-DJGMI BR 3X (JDST): ETF Research Reports
DIR-DJGMI BL 3X (JNUG): ETF Research Reports
DIR-D GM BL 3X (NUGT): ETF Research Reports
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