Similarly, the Direxion Daily Junior Gold Miners Index Bear 3x Shares takes the -3x or -300% daily results of the MVIS Global Junior Gold Miners Index, the same underlying index for GDXJ. This ETF leans toward more small-cap miners that are in their exploratory or early development phase, but the higher risk could potentially equate to larger swings.
The two leveraged inverse gold miner ETFs have been a popular way for traders to capitalize on sudden sell-offs in the gold market. For instance, DUST has surged 28.3% since its early September lows, which coincided with gold miner sector’s high, while JDST has jumped 31.1%.
Potential traders should keep in mind that due to the volatility associated with the sector, the leveraged inverse ETFs may not perfectly reflect their intended -3x strategy over the long-term. Since the ETFs rebalance on a daily basis the compounding of rebalancing could cause the leveraged products to diverge – this is particularly evident during periods of greater volatility. Nevertheless, this has not stopped traders from enjoying the benefits of a quick hedge to capitalize on short-term moves.
For more information on the gold market, visit our gold category.