Investor Guide To Leveraged Precious Metal ETF Trading

The product charges 75 bps in fees per year from investors and has amassed over $230 million in its asset base, making it a relatively popular fund (read: 3 Metal ETFs to Buy on the Commodity Upswing).

VelocityShares 3x Long Gold ETN (UGLD)

This product provides three times (3x or 300%) exposure to the daily performance of the S&P GSCI Gold Index Excess Return plus returns from U.S. T-bills net of fees and expenses. The ETN has been able to amass an asset base of only $37 million.

Though the note is the high cost choice in the gold bullion space, charging 135 bps in fees per year, its moderate average daily volume of nearly 185,000 shares ensures relatively narrow bid/ask spreads.

Silver

Silver is outperforming gold by wide margins, reflecting a bullish sign for the metal. In fact, the white metal climbed 27% from its multi-year lows reached in late June.

Silver bullion is not only benefiting from being a precious metal and a store of wealth, but also from the uptick in industrial activities and the consequent improvement in the global economic sentiments.

Unlike gold, silver is used in a wide range of industrial applications and about 50% of the metal’s total demand comes from those. Another 30% comes from jewelry, silverware, coins and medal manufacturers.

Investors could focus on these two leveraged silver ETFs in order to tap the growing bullion space.

ProShares Ultra Silver ETF (AGQ)

This fund seeks to deliver twice (2x or 200%) the return of the daily performance of silver bullion in U.S. dollars; the silver price is fixed for delivery in London. The product has gained popularity as indicated by its AUM of $664.7 million and average daily volume of more than 1.8 million shares while it charges 95 basis points a year in fees.

VelocityShares 3x Long Silver ETN (USLV)

This product provides three times (3x or 300%) exposure to the daily performance of the S&P GSCI Silver Index Excess Return plus returns from U.S. T-bills net of fees and expenses. The ETN has $180.1 million in AUM and trades in average daily volume of 1.5 million shares, ensuring little extra cost beyond the expense ratio of 1.65%.

Platinum

Platinum has risen 14% over the past two months on the back of worries over the potential supply disruption in South Africa and hopes of strong demand from Europe (read: Platinum ETF in Focus on More South Africa Worries).

Investors have only one way to play the platinum using VelocityShares 2x Long Platinum ETN (LPLT) in the leveraged world. This ETN provides investors exposure to two times (2x or 200%) the daily performance of the S&P GSCI Platinum Index Excess Return plus returns from U.S. T-bills, less fees and expenses.

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