Leveraged Gold Miners ETFs See Big Increase in Activity

Although many market participants still expect the U.S. central bank to boost borrowing costs multiple times this year, investors are renewing their affinity for gold ETFs early in 2017. In the face of a stronger dollar and speculation that the Federal Reserve could raise interest rates as many as three times this year, gold prices could move modestly higher with some help from emerging markets, namely China and India. However, the dollar has recently retreated in noticeable fashion, helping aid gold’s ascent along the way.

Regarding JNUG, “As the number of shares traded on the leveraged ETF surged to a daily average of 54 million this year, the volume of bullish options doubled to almost 19,700, compared with about 7,900 bearish contracts. At 1.6-to-1, the ratio of outstanding calls to puts on the fund is higher than for the VanEck Vectors Gold Miners ETF, data compiled by Bloomberg show,” according to Bloomberg.

ETF traders who are uncomfortable with the riskier 3x products can also track the miner space with a smaller 2x leverage. For example, the ProShares Ultra Gold Miners (NYSEArca: GDXX) and ProShares Ultra Junior Miners (NYSEArca: GDJJ) take the 2x or 200% daily performance of NYSE Arca Gold Miners Index and Market Vectors Global Junior Gold Miners Index, respectively.

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