Christian Magoon: Gold is getting hammered – first by the crushed hopes for QE3 in late February and now by the EU debt crisis and weakening economies within India and China. These factors combined this week to push traditional gold ETFs into negative territory for 2012. At the same time short gold ETF products have benefited, with most generating positive double digit returns over the last month. Before examining the short gold ETF list and performance however, let’s review the returns of physical gold ETFs year to date from GoldETFs.biz.
Gold has been on a downward trend since late February and is now getting close to its 12 month low. Here’s a one year chart of the largest gold ETF, SPDR Gold Trust (NYSEARCA:GLD), from stockcharts.com.
There are five products in the short gold ETF and ETN arena that take advantage of a decline on gold prices or gold mining stocks. Here’s the list from GoldETFs.biz.
It’s important to understand that short gold ETF and ETN products are generally designed for use over a single day and need constant monitoring. In addition, most of these products use leverage which increases volatility. Here’s a quick breakdown of the short gold ETF and ETN list sorted by the inverse daily factor. As always, be sure to read a prospectus before investing in any product – especially short ETFs and ETNs.
While gold has been falling these ETF and ETN products have generated gains of 4% – 41% over the last month. In fact, to conclude here’s the recent performance grid snapshot showing all short gold ETF and ETN products.
Tickers: Direxion Daily Gold Miners Bear 3X Shares (NYSEARCA:DUST), VelocityShares 3x Inverse Gold ETN (NYSEARCA:DGLD), ProShares UltraShort Gold (NYSEARCA:GLL), Deutsche Bank AG DB Gold Double Short ETN (NYSEARCA:DZZ), Deutsche Bank AG DB Gold Short ETN (NYSEARCA:DGZ), iShares Gold Trust (NYSEARCA:IAU), ETFS Gold Trust (NYSEARCA:SGOL), ETFS Physical Asian Gold Shares (NYSEARCA:AGOL).
Christian Magoon is Publisher of GoldETFs.biz and IndiaETFs.com. He is also CEO of Magoon Capital, a strategic consultant firm to asset managers. Christian Magoon is an ETF insider, having launched over 40 ETFs in the United States to date. A widely recognized thought leader on finance and market issues, Christian regularly contributes to many financial media outlets. Prior to forming Magoon Capital in 2010, Christian was President of Claymore Securities (now Guggenheim Investments), where he built one of the fastest growing and most innovative ETF businesses in the country, gathering more than $3 billion in AUM in three years. He launched more than 40 ETFs, introducing many “firsts” to the U.S. market, including the first Frontier Markets, Sector Rotation, Solar Energy, Timber, BRIC and suite of China focused ETFs. Christian consistently provides his industry insights and knowledge as a commentator in the U.S. media speaking publicly on macro investment issues and ETF related topics. In 2008, he was named by Institutional Investor News as one of the five people to watch in the U.S. ETF marketplace. In 2011, Financial Planning magazine dubbed Christian an “ETF Pioneer.”