Expect a Bumpy Ride for Gold Miners ETFs

Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield.

“Investors apparently are still relatively bullish on the sector, pouring money into the funds. The large-cap fund drew inflows of $769 million over the past month, bringing its year-to-date flows to $1.12 billion. The Junior fund has attracted inflows of $1.29 billion thus far in 2017 and $416 million over just the past month,” according to MarketWatch.

Aggressive traders willing to bet on more declines for gold miners can consider the Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST) and the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST).

GDX is comprised of global gold miners, with a notable tilt toward Canadian and U.S. mining companies. Nevertheless, gold assets may have further room to fall if the U.S. dollar and real bond yields continue to rise.

For more information on the gold market, visit our gold category.