SPDR Gold Shares GLD ,
the world's largest exchange traded fund backed by physical holdings of
bullion, down a quarter of a percent as traders wager whether the
Federal Reserve will soon raise interest rates.
Gold prices are trading modestly lower Monday with the
Widely consider to be a positive for the dollar, higher interest rates
are viewed as the opposite for gold because the yellow metal, like other
commodities, is priced in dollars meaning it is vulnerable to a
stronger greenback. That much has proven over the past two years, but
gold's sensitivity to speculation on the Fed's next move is not stopping miners ETFs, including leveraged funds, from following through today on last Friday's impressive showings.
After surging more than 8 percent last Friday, the
Market Vectors Gold Miners ETF GDX
was higher by nearly 4 percent at time of writing. Several other
precious metals miners ETFs rank among Monday's top percentage gainers
among non-leveraged ETFs and that is excellent news for leveraged mining
funds.
Run With The Gold
With GDX, the largest gold miners ETF, higher by almost 4 percent, the
Direxion Daily Gold Miners Bull 3X Shares NUGT
is flirting with a Monday gain of nearly 12 percent and doing so on
volume that could top the trailing 90-day average. Nearly 3.6 million
shares have already changed hands in NUGT as of this writing and the
ETF's average volume over the past three months is just over 5.1 million
shares.
As GDX was able to do last week, NUGT now resides above its 20- and
50-day moving averages though like its non-leveraged counterpart, NUGT
has plenty of work to do to reclaim its 200-day line. NUGT resides more
than 61 percent below that critical moving average.
Dust Up
Adding to the intrigue surrounding NUGT is that last Friday's pop did
little to generate confidence among traders. Actually, data suggest
traders saw NUGT's surge on that day as an opportunity to take profits
and cozy up to its bearish equivalent, the
Direxion Daily Gold Miners Bear 3X Shares DUST
Traders pulled $48.4 million from NUGT last Friday, the worst outflows tally for any of Direxion's triple-leveraged ETFs,
according to issuer data.
Conversely, DUST saw the best one-day inflows among Direxion leveraged
ETFs with new assets arriving to the tune of $30.1 million.
This is an important tell regarding DUST and NUGT because a rather easy
trade has been to buy the member of this pair that everyone else is
selling because, more often than not, the member of this pair riddled by
outflows is the one seeing positive price action
while the gaining assets is plunging. Consider this: NUGT has lost
two-thirds of its value this year but has hauled in almost $730 million
in new assets. On the other hand, DUST has lost about 27 percent
year-to-date, with the bulk of those losses coming in recent weeks, but
the ETF has seen outflows of roughly $126 million.
Another important point to remember is that one needs to know what one
is getting involved with DUST and NUGT. That means volatility. Over the
past 30 days, only two of Direxion's leveraged bullish ETFs have been
more volatile than NUGT and only two of the firm's bearish leveraged
funds have been more volatile than DUST, according to issuer data.
