Three Gold leverage ETFs for a rising gold price

Posted on Posted in Investments

Gold is back in favour with investors. In June, 2019 the US Labor Department reported that only 75,000 jobs were created in May, 2019 which was below expectations of 175,000 for non-farm payroll. The unemployment rate stayed at 3.6%. The disappointing job numbers could be an indication that the US economy may be slowing down. In addition the Federal Reserve has indicated that it may lower interest rates later on this year.

If real interest rate fall, investors tend to invest in gold as the opportunity cost of holding gold diminishes. It may also be an opportunity to buy gold for your IRA to diversify risk. The continued trade war with China also exacerbates the relationship between the two countries.
To take advantage of a rising gold price, investors could look at bullish leveraged gold ETFs. Leveraged ETFs magnifies investor returns if gold price rises. Conversely, losses are magnified if gold drops. Three leveraged gold ETFs to look at are:
1. Proshare Ultra Gold ETF (ticker: “UGL”)
2. DB Gold Double Long ETN (Ticker: “DGP”)
3. Velocity Shares 3x Long Gold ETN (Ticker: “UGLD”)

1. Proshares (UGL):
ProShares Ultra Gold seeks daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of gold bullion as measured by the p.m. U.S. Dollar price for delivery in London.


2. DB Gold Double Long (DGP):
The Power Shares DB Gold Double Long ETN is an exchange-traded note issued in the USA by Deutsche Bank AG (London). The Notes will provide investors with a cash payment at the scheduled maturity or early redemption, based on the double the performance of its underlying index plus the monthly T-Bill index return.


3. Velocity Shares (UGLD):
The Velocity Shares metals exchange traded product suite includes leveraged long and inverse positions in futures on gold, and silver, as measured by the SP GSCI indices. While institutional investors have available a variety of instruments (such as futures, swaps, and forwards) to express views on metals, this suite of exchange traded products provides a convenient alternative with unique capabilities.

 

Below is a daily price chart of Ultra Gold Velocity Shares (“UGLD”)

Notice the price island for the last five days. An island is technical term that signals a price reversal in the short term.