Amid an uptick in equity market volatility, some traders are seeking refuge in a familiar place: gold. Market participants are also renewing their enthusiasm for some gold miners exchange traded funds (ETFs), including leveraged fare.
The VanEck Vectors Gold Miners ETF (NYSE: GDX), the largest non-leveraged gold miners ETF, surged nearly 4 percent last week as traders flocked to the fund.
“Investors piled into VanEck’s Vectors Gold Miners exchange-traded fund last week to the tune of $529 million, the most since September 2013,” reports Bloomberg. “The ETF holds shares of mining companies including Newmont Mining Corp. and Barrick Gold Corp. Gold meanwhile rallied after two weeks of declines.”
What The Data Say
Last Friday, traders allocated $16.1 million to NUGT, good for the largest total among all Direxion leveraged bullish ETFs, according to issuer data. Conversely, the Direxion Daily Gold Miners Index Bear 3X Shares (NYSE: DUST) suffered outflows of $27.2 million last Friday, the worst total among the issuer's bearish funds.
NUGT attempts to deliver triple the daily returns of the NYSE Arca Gold Miners Index, the same index GDX tracks. DUST tries to deliver triple the daily inverse returns of that benchmark.
DUST and NUGT can be among the most volatile leveraged funds in the Direxion stable, reminding traders that the best use of these products as over intraday time frames. No leveraged ETF should be used for long holding periods and that is particularly true of the leveraged gold miners products, bullish or bearish.
While money is flowing back to some traditional gold miners ETFs, traders are leaning bullish with leveraged fare.
For example, over the past month, NUGT is averaging daily inflows of $7.11 million while its small-cap counterpart, JNUG, is averaging inflows of nearly $1.4 million, over that period, according to Direxion data.
On the other hand, DUST and the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSE: JDST) are averaging daily outflows over the past month.
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