ETF Trends
ETF Trends

The SPDR Gold Shares (NYSEArca: GLD), the world’s largest ETF backed by physical holdings of gold, fell 3.3% and is now off nearly 10% from its January highs. Even with Monday’s modest upside, gold futures have traded lower in seven of the past 11 session.

Improving labor data are fueling Federal Reserve rate hike speculation and dragging on the gold bullion and miner-related exchange traded funds. That much was confirmed by last week’s declines of more than 10% for the Market Vectors Gold Miners ETF (NYSEArca: GDX) and the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ). [Trouble for Gold Miners ETFs]

GDX and GDXJ both plunged last Friday, but those declines prompted some speculative traders to make large bets on those ETFs’ leveraged equivalents, bets that are going terribly wrong Monday.

The Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) and the Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEArca: JNUG) are off 9.1% and 10.8%, respectively, at this writing Monday.

Those declines come after traders poured $117.6 million into NUGT and nearly $31.4 million into JNUG last Friday, according to Direxion data. NUGT and JNUG are the triple-leveraged answers to GDX and GDXJ.

Inflows to NUGT and JNUG arrived as the ETFs lost 21.5% and 21.9%, respectively, last Friday, making the pair the two worst-performing bullish leveraged ETFs in Direxion’s stable for the day. Conversely, the Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST) and the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST), which each gained more than 22% last Friday, saw outflows. Investors pulled over $40 million combined from DUST and JDST last Friday, according to Direxion data. [A Gentler View of Leveraged ETFs]

Earlier this year, GDX and GDXJ were two of several miners funds that ranked among the best non-leveraged ETFs to start the year. At one, five of the top 10 non-leveraged ETFs on a year-to-date basis were gold miners funds. Today, that number is zero as GDX and GDXJ have given up all their 2015 gains and are negative on the year.

The recent action in DUST, JDST, JNUG and NUGT is a reprisal of a familiar theme. Traders pour money into the members of that quartet that are heavily beaten up on a particular day while pulling money from the ones that surged the same day in hopes of catching a big reversal the following day. As Monday’s action in the triple-leveraged gold miners ETFs proves, that is a dangerous game to play. [Interesting Action in Leveraged Miners ETFs Flows]

Month-to-date, DUST and JDST are Direxion’s top two leveraged bearish ETFs while JNUG and NUGT are the issuers two worst-performing leveraged bullish funds.

Direxion Daily Gold Miners Bear 3X Shares

Tom Lydon’s clients own shares of GLD.