Despite a rough start to the second half of 2022, the Direxion Daily Metal Miners Bull 2X Shares (MNM) is still up about 13% for the year. The fund is holding onto its early strength despite a rising dollar and could see more strength if inflation starts to fizzle out.
A hawkish Federal Reserve will more than likely continue rate hiking measures in order to cool off inflation. However, there could be early signs that rising interest rates could be having less of an effect on the markets versus previous months.
Precious metals like gold are already seeing early signs of strength. The divergence in the S&P GSCI All Metals index and the ICE US Dollar index has been apparent just ahead of the summer rally in equities, but the greenback’s lead could be dwindling.
“Gold is higher as the historic run higher in the dollar appears to have run out of steam,” said Ed Moya, analyst at online trading platform OANDA. “It seems Wall Street is getting comfortable with the idea of another 75-basis point rate hike by the Fed.”
Amplified Metal Mining Exposure
Traders looking to play moves with added leverage to match their conviction can look to leverage exchange traded funds (ETFs) such as MNM. Like all leveraged Direxion ETF products, the fund provides tactical exposure to a long bias in metal mining in the convenience of an ETF wrapper.
The fund seeks daily investment results, before fees and expenses, of 200% of the performance of the S&P Metals and Mining Select Industry Index. The index is a modified equal-weighted index that is designed to measure the performance of the equity securities of companies in the S&P Total Market Index that are classified by the GICS as being in the metals and mining industry.
The metals and mining industry includes companies in the following sub-industries: aluminum, coal & consumable fuels, copper, diversified metals & mining, gold, precious metals & minerals, silver, and steel. The index does not include metal commodities, so long-term investors looking to diversify their portfolios with commodities should look at other options.
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