3X Leveraged Gold: One Year Later

The gold ETF space has been one of the most active in the industry in recent years. In fact, the SPDR Gold Trust (NYSEARCA:GLD) is the second-largest exchange-traded product in the world with well over $70 billion in total assets. But the options do not end there, as issuers have continued to innovate with new and exciting products to give investors multiple ways to play their precious metal. Leveraged products have been among the most popular innovations, as they allows traders the opportunity for big gains (or, unfortunately, losses) [for more gold ETF news and analysis subscribe to our free newsletter].

Late last year, a pair of gold ETFs debuted with a 300% leverage, the first and only of their kind. Below, we take a look at how the two funds have done in their first year on the market, and what happens next for the products.

3x Inverse Gold ETN (DGLD)

The bear fund is geared towards those with a negative outlook for the precious metal. Unfortunately, many investors carry a bullish sentiment on the precious metal, making this fund the less popular than its counterpart. Currently, the fund has just over $5 million in assets and trades around 7,000 shares each day. Typically the $25 million threshold is what issuers like to see in an ETF, so DGLD’s asset base certainly puts it on the watch list. If the fund is unable to scrape up more assets in the coming year, it could be in danger of shutting down [see also 3 Metals Outshining Gold].

As with any leveraged fund, the performance of this ETF has been all over the board, as gold has been relatively volatile as of late. The fund is down about 25% since inception, but has been very effective in times of gold weakness.