Gold ETF’s Direxion Daily Junior Gold Miners Index Bear 3x Shares (JDST) and Direxion Daily Junior Gold Miners Index Bull 3x Shares (JNUG)
Traders News Source 10-8-16 Ramakrishnan Iyer
After the biggest slump in the prices of gold futures in a period of almost 3 years, the market stabilized. Gold futures for delivery in December declined by 0.1% to $1268.60 an ounce in the Comex in New York following a decline of 3.3% on the previous day. Prices are now down by 7.9% since the peak in July because the appeal of gold is being cut by the expectations for tighter monetary policy in the US and Europe. A gold trader in London said that the gold bull has been given a good scare, but that it is not yet dead. The price could drop to $1172 and there could still be a medium-term continuation of the upward move. Some experts believe that things will get worse before they get better and that prices are likely to bottom out at $1257 an ounce. The decline on Tuesday was in the wake of official comments by Federal Reserve Bank of Cleveland president Lauretta Mester and Jeffrey Lacker of the Richmond Fed. The European Central Bank policymakers have appeared to have reached an informal consensus in the past month that asset buying will have to be curtailed when the decision is taken to end the program.
However, gold continues to be regarded as a safe haven and may even be enhanced because of the risks associated with the US presidential election in November and the talks concerning Britain and Brexit. One expert believes that gold could rally as quickly as it fell and the weak inflationary pressures may enable gold to reach its previous heights in price. A panel of 14 senior gold producers Followed by Bloomberg Intelligence showed extended losses and the index has declined by 10% this week. Despite the trend in gold prices, investors continue to hold ETFs and assets increased by 3.1 metric tons to 2036.5 t on Tuesday, which is near the highest level since 2013. The online trading platform BullionVault reported that trading on Tuesday was at the heaviest since June 14, which is the date on which voters in the UK chose to leave the EU and buyers outnumbered sellers by 7 to 1.
After falling for four consecutive days, gold continued to decline on 6 October and reached the lowest price levels in four months. The COMEX gold futures contract for December delivery fell 1.2% to $1,249.8 per ounce-the lowest level since June 8. The continuing fall can be attributed to the better than expected US economic data, such as consumer sentiment, ISM manufacturing data and initial jobless data. Experts believe that this increases the chances of an interest rate hike in the near term and pulled down gold prices. According to the data from the US Department of Labor, jobless claims fell by 5000 to 249,000 last week, which is the lowest level since April and the second lowest level since 1973. Gold ETF’s also dropped to a 4 month low and tested the long-term support since the increasing bets on interest-rate hikes brought down Gold ETF’s to the level of the long-term trend. There was a recovery in gold from the earlier decline on 7 October and prices were up 0.63% at $1,262.76.
The opportunity in gold mining shares
Gold mining shares have been big winners in 2016 especially the smaller producers though this fact has not been widely publicized. They have been outperforming gold bullion since the low point of January 20, 2016. However, it must be remembered that the early stages of bull markets show more than average volatility in price fluctuation showing large losses on some days and large gains on others. It can be expected that once this period of volatility passes, investors will probably be keen to buy at much higher valuations. Moreover, many gold shares have registered a drop of 20% or more, leading many self proclaimed pundits to declare that gold mining shares have entered a new bear phase. However, because the market is difficult to predict. In the short term, investors should concentrate on their investments in 2017 or maybe in 2018.
Gold ETF’s Direxion Daily Junior Gold Miners Index Bear 3x Shares (JDSTand Direxion Daily Junior Gold Miners Index Bull 3x Shares (JNUG)
The Direxion Daily Junior Gold Miners Index Bull and Bear 3x Shares have the objective of daily investment results, before fees and expenses, of 300% or 300% of the inverse (or the opposite) of the performance of the MVIS Global Junior Gold Miners Index. This is a leveraged ETF which has the objective of seeking a return of 300% or – 300% of the return of the benchmark index for a single day. Leverage and inverse ETFs should be regarded as riskier than alternatives that do not employ leverage and unintended only for investors who comprehend the risk of leverage and are involved in active management of their investments. The target benchmark index
The MVIS Global Junior Gold Miners Index is a cap-weighted total return index covering only the last and most liquid small cap stocks, which derive at least 50% or more from gold or silver mining. Companies must have ADTV of $1 million, $250,000 shares/month and a market cap in excess of $ 150 million under which is limited to a maximum of 8% per company reviewed quarterly. As of June 30, 2016, the average market of the index was $1.01 billion and the median was $929 million. The top 10 holdings included the likes of B2Gold Corp 5.38 % and Alamos Gold Inc 4.97 % and the top index country weightings were Canada 64.91%, followed by the United States 11.46%.
The market price for these ETF’s are the prices at which they are bought and sold in the secondary market and they are designed to trade more or less in line with the intra-day value subject to market volatility. ETF’s are generally popular because of liquidity, transparency, trading in real time and comparatively low fees. The liquidity refers to the degree to which buying or selling effects the fair market value and is mainly determined by the trading volume of the underlying securities.
Traders News Source has compensated the author for the redistribution rights.
Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article. The information contained herein is not intended to be investment advice and does not constitute any form of invitation or inducement by Ramakrishnan Iyer, to engage in investment activity. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE: Traders News Source and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold Traders News Source, its operators owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Traders News Source encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and Traders News Source makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead Traders News Source strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D. Traders News Source is compliant with the Can Spam Act of 2003. Traders News Source does not offer such advice or analysis, and Traders News Source further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries and extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur. Understand there is no guarantee past performance will be indicative of future results.
In preparing this publication, Traders News Source has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information
Securities, financial instruments, strategies, or commentary mentioned herein may not be suitable for all investors and this material is not intended for any specific investor and does not take into account an investor’s particular investment objectives, financial situations or needs. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only current as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fluctuate, and an investor may, upon selling an investment lose a portion of, or the entire principal amount invested. Past performance is no guarantee of future results. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.