NUGT (Direxion Daily Gold Miners Bull 3X Shares, Expense Ratio 0.95%) has pulled in a substantial >$220 million via creation activity in recent sessions, on very heavy trading volume in the product.
On several occasions trading volume has eclipsed 30 million share mark versus the ETF’s ADV of about 18.5 million shares. The fund of course tracks the NYSE Arca Gold Miners Index on a three times leveraged daily basis, the same underlying index that GDX (Market Vectors Gold Miners, Expense Ratio 0.53%) of course tracks.
The trade looks like an attempt to catch a falling knife on the dip as Gold Miners recently (yesterday) traded at their lowest levels since late December of last year before bouncing to some degree. Volatility in the space remains high as Gold prices continue to stagger today, with GLD (SPDR Gold Trust, Expense Ratio 0.40%) still struggling with a $110 handle.
It of course has caved in since late January with spot gold prices themselves (GLD traded with a $125 handle briefly in late January), but some seem to be bargain hunting in the Miner stocks themselves given these levels.
The individual stocks that both GDX and NUGT of course tracking the same index are most sensitive here given their weightings are GG (>10.1%), ABX (>8.6%), NEM (>7.4%), Newcrest Mining Ltd. (>5.5%), GOLD (>5.3%).
One observation here that we think is a fair one, and that is to simply comment on the immense and still growing apparently, popularity of both GDX and NUGT among daily and short term traders and hedgers, as GDX now averages more than 50.5 million shares traded on a daily basis while NUGT averages 18.3 million shares (an average that has been pulling up lately thanks to larger swells in trading volume there).
While NUGT’s asset levels tend to change dramatically given short term flows obviously tied to shorter term “Bull/Bear” sentiment in the space (for example, the fund currently has about $682 million in AUM, but note that a substantial portion of that came from recent larger inflows in the fund) it is still the third largest fund in the “Gold Miners” ETF category, behind both GDX ($5.6 billion in AUM) and GDXJ (Market Vectors Junior Gold Miners, Expense Ratio 0.57%, $1.5 billion in AUM). DUST (Direxion Daily Gold Miners Bear 3X, Expense Ratio 0.95%), sister ETF of NUGT is substantially smaller with $229 million in AUM at the moment.
Direxion Daily Gold Miners Bull 3X Shares
For more information on Street One ETF market commentary and ETF trade execution/liquidity services, contact Paul Weisbruch at email@example.com
Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.