Is It Time to Tail Sam Zell's Bet on Gold?

A pair of gold miner ETFs from Direxion might be the way to tail legendary investor Sam Zell’s bet on gold, given current inflationary pressures.

As the U.S. economy starts to re-open amid the Covid-19 vaccine deployment, the cost for goods and services could be on the rise. This, in turn, could weaken the dollar while stimulus money is already being pumped into the economy.

It could be tangible assets like gold that could see strong demand. The precious metal is one of the ways investors can shield themselves against a rising tide of inflation.

“Obviously one of the natural reactions is to buy gold,” said Zell in a Bloomberg Television interview. “It feels very funny because I’ve spent my career talking about why would you want to own gold? It has no income, it costs to store. And yet, when you see the debasement of the currency, you say, what am I going to hold on to?”

The Fed’s recent move to stand pat on rates could be sending mixed signals, but not to Zell. He is already seeing signs of inflation abounding in today’s market environment.

“Oh boy, we’re seeing it all over the place,” Zell said. “You read about lumber prices, but we’re seeing it in all of our businesses. The obvious bottlenecks in the supply chain arena are pushing up prices. It’s very reminiscent of the ‘70s.”

A Pair of Gold Miner ETFs

Last year’s safe haven scramble saw gold rise to new highs, but what went up eventually had to come down in 2021. Gold prices have fallen just over 6%, but if inflationary pressures start to form, investors could be diving back into the precious metal.

Rather than making a pure play on gold, ETF traders can turn to a pair of leveraged funds from Direxion:

  • Direxion Daily Jr Gold Miners Bull 3X ETF (JNUG): Seeks daily investment results, before fees and expenses, of 200% of the daily performance of the MVIS Global Junior Gold Miners Index. The index includes companies from markets that are freely investable to foreign investors, including “emerging markets,” as that term is defined by the index provider.
  • Direxion Daily Gold Miners Bull 3X ETF (NUGT): Seeks daily investment results, before fees and expenses, of 200% of the daily performance of the NYSE Arca Gold Miners Index. The index is comprised of publicly traded companies that operate globally in both developed and emerging markets, and are involved primarily in the mining for gold, and, in mining for silver.

Gold Price in US Dollars Chart

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