February 28, 2008 at 1:00 pm by Tom Lydon
Three more gold-focused products are hitting the marketplace - this time in the form of exchange traded notes (ETNs).
Deutsche Bank’s new line of ETNs are linked to the Deutsche Bank Liquid Commodity Index - Optimum Yield Gold:
- DB Gold Double Short (DZZ): Offers exposure to two times the monthly inverse performance of the index, plus a monthly T-Bill index return.
- DB Gold Double Long (DGP): Offers two times the monthly performance of the index, plus a monthly T-Bill index reutrn.
- DB Gold Short (DGZ): Offers the monthly inverse performance of the gold index, plus a monthly T-Bill index return.
The lineup is the first to offer investors the opportunity to gain short or leveraged exposure to gold.
The precious metal has been in the news increasingly frequently, as it keeps hitting new heights. Today, futures rose to an all-time high of $970 an ounce, owing largely to the dollar’s tumbling value, reports Polya Lesova at MarketWatch. The rising prices have kept the related exchange traded funds (ETFs) moving upward, as well:
February 28th, 2008 at 5:44 pm
I wouldn’t mind a bit more detailed note some time (sorry if I’ve already missed it), on the main differences between ETNs & ETFs.
Skipping past that, a DOUBLE long on gold? Holy cow!
Any chance of a silver double long?
On a completely separate track, I’d be interested in a note on your thoughts on the rogue wheat trader story today to the tune of a $141 million loss.
Thanks!
February 29th, 2008 at 6:10 am
All of these new products could be a contrarian sign on commodities. The vast majority of commodities have enjoyed tremendous appreciation in the past couple years. If a global recession kicks in wouldn’t you expect to see a massive decline in the USD pricing of oil? Maybe back down to ~$75 - $80 per barrel? Copper had a negative writeup in Forbes (March 10 issue) from A. Gary Shilling and he makes some valid points. It may be worth reading.
I read your previous post on the double short gold etf. I’d like to see a short copper etf myself.
All The Best
Dave
February 29th, 2008 at 1:19 pm
Hi Tim,
Here’s a post we wrote about the difference early last month:
http://www.etftrends.com/2008/01/etf-vs-etns.html
July 19th, 2008 at 1:41 pm
I love all the ETF variety that’s coming out lately, but I want more!!!
Somebody please help me in this wonderful dream world of Leveraged ETFs. I am long with GLD and SLV which I expect to rise into the stratosphere as the USD’s slide downward accelerates into the bottomless black hole pit of hyper-inflation and dollar dumping by foreign central banks everywhere moving to Gold and/or Euros (last one out i$ a rotten egg event horizon reality check).
I am however torn, as GLD and SLV are already leveraged plays against ever increasing inflation and the general US stock market demise, along with all assets that are unfortunately pegged to or denominated by US paper dollars. I particularly like my spread out position in Vector Mining Gold Stocks via GDX, as Gold Mines seem to move inversely to stock market/dollar depreciation with additional leverage, much like a double long positon on GLD.
With all the new highly focused and leveraged ETF/ETNs coming out all the time for all kinds of market sectors, commodities, regions, emerging countries and technologies, long/short, I would particularly like to see some that combine things that move parallel with each other under certain market conditions, and with additional leverage:
Here’s some ideas:
1) How about a Vector Gold Mining Stocks ETN (possibly some with some Silver, Copper, etc) with long and double longs for maximum leverage.
2) How about something like a PBW WilderHill Clean Energy Portfolio, but with a twist or two, such as stocks in certain selected high quality/efficient clean renewable market ready alternative sustainable energy technologies as wind/solar/thermal/fuel cells/ etc… Build upon the Massive News Media Publicity and the T Boone Pickens’ Plan that is already generating so much awareness and critical mass now…
The major focused difference is TAKE IT TO THE HOUSE!!! Home Grown, not somewhere else in the country, but literally at home (or small community) IMMEDIATELY- without more wasted time and money trying to bridge the differences between divided political parties in a hotly contested election cycle (a literal “Act of Congress”). The technologies exhist RIGHT NOW!!! Yes, lets build the huge solar/wind farms and transmission infrastructure upon evenually getting gov’t approval for the corridors (if politicians can ever agree on anything so vitally important to national security), but lets not wait around for terrorists in the middle east to disrupt the flow of the current US lifeblood at fuel terminals or the Straight of Hormuz cutting off 40% of the planet’s PETRO exports, in another sucker-punch attempt to financially KO and totally shut down/destroy our economy and country without firing a bullet at US on this side of the planet.
Why waste any more time waiting on politicians pre-election promises when we can prudently get prepared right now, even just in case the electrical grid goes down in a chain reaction domino effect again for any reason. Wouldn’t it be great to be able to keep your own little part of this crazy world going at home or in your small community, with an organic garden (preferrably with some POT ash fertilizer and non-gmo seed stock growing out back if the grocery store isn’t happening because of no diesel rigs running on empty). How about long and double long positions on this newly understood prudent potentially life-saving preparation position (much thanks to T. Boone Pickens).
We all need to do what we can to become energy independent and spread the word, thus increasing the sales of these market ready technologies, taking advantage of exhisting gov’t tax credits and incentives that must be extended for national security purposes, and best of all… PEOPLE LOVE THE IDEA OF THE ELECTRIC COMPANY HAVING TO PAY THEM BY LAW IF THEY FEED THEIR EXCESS POWER BACK INTO THE GRID!!!
I am absolutely sure that an ETF/ETN that helps everyone to quickly and efficiently wean themselves off of spOIL and GET OFF THE GRID NOW instead of waiting until some date in the possibly too late future will be an immediate overnight all-time high-volume high-power miracle.
PowerShares can label their newest profitable and powerful clean energy alternative focused ETF/ETN rollout: PowerX: PWRx and the more leveraged variety UltraPowerX: UPWRx
We need to stop talking about energy independence, and start having it.
And finally…
3) Isn’t it time for not just an ETF variety of the VIX, but a leveraged ETF variety of the VIX?? I want that ETF right now too. I really like SKF again now. Also check into ZN… PURE GOLDEN HONEY!!!
Best of Luck in this Increasingly Volatile Market and Crazy World…
Remember… When –it hits the FAN, it’s better than hitting your face.
It’s better to have it and not need it than to need it and not have it. Be prepared ahead of the next ominously emerging telegraphed disaster. Short the stock markets if you want, but don’t be caught without your shorts on when you wake up, to suddenly realize that you are totally short on the essential commodities and necessities when the American Dream suddenly turns into a stagflation nightmare.
From everything I am seeing, Paper “money” or reserveless “notes” will soon make good firefuel or toilet paper, so get some real money with the paper “notes” now, before run-away inflation totally eats them up, and leaves you and your family with nothing to eat. Talking heads and propaganda ministers on TV (NEWS) tell you inflation is relatively low, but Your GUT instinct tells you that the real rate of insideous inflation is best measured by the Misery Index, which includes RAPIDLY INCREASING FUEL COSTS, EXPENSIVE ESSENTIAL COMMODITIES GROCERIES, and that uneasy rumble in your tummy. If the head and the gut disagree, go with the GUT. Filter out the noise and listen to the voice inside.
The paper “notes” still say IN GOD WE TRUST. Trust HIM, not the paper!