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Precious Metals
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General Precious Metals
Investors Flock to Supercharged Gold Bet That's Returned 180%
Gold doesn’t offer yield. Junior miners may, and a leveraged exchange-traded fund tracking them has investors flocking to it.
As the Direxion Daily Junior Gold Miners Index Bull 3x Shares almost tripled in the past two months, the number of shares changing hands has surged nearly fourfold this year. That’s even as trading has dropped for an ETF tracking larger mining peers and for the SPDR Gold Shares, the largest bullion-backed fund. The boost in volume has also led to a jump in bullish options on the leveraged security, with more than two calls for each put.
Investors seeking refuge from political uncertainty in the U.S. and Europe have piled into gold in recent weeks, its appeal further buoyed by a perception that the Federal Reserve would be slow to raise borrowing costs. Betting on miners has the advantage of giving exposure to dividends, and going for a leveraged security amplifies the returns in a rallying market. The Direxion fund has soared almost 180 percent from a 10-month low in December, while the precious metal has climbed about 10 percent.