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Direxion, a provider of short and leveraged exchange-traded funds, has announced the launch of two ETFs offering triple leveraged long and short exposure to gold.
Listed on the NYSE Arca, the Direxion Daily Gold Bull 3X Shares (GLDL) and Direxion Daily Gold Bear 3X Shares (GLDS) seek to deliver 300 percent of the daily performance or 300 percent of the inverse of the daily performance, respectively, of Comex Gold Futures specified by the Chicago Mercantile Exchange.
The reference index for the ETFs is the daily last sale price value occurring on or before 4 p.m. EST of a standard gold futures contract for the current active month for 100 troy ounces of gold.
“Direxion’s leveraged ETFs are aggressive, athletic trading tools designed to provide sophisticated traders with vehicles to take advantage of market opportunities in either direction. By providing exposure to select markets on the long and short side, we help traders respond to short-term price movement as part of their overall active investment strategies,” said Dan O’Neill, CEO of Direxion.
Gold and gold futures are often considered a play on economic, political, or currency events. Many investors think the decline in gold prices that started last year will continue, and that gold may be susceptible to a severe drawdown similar to the period from 1988 to 1999. There’s sentiment from others that gold has bottomed, and it’s time to buy low.
“With 3X exposure in either direction, GLDL and GLDS provide the boldest way to seek returns from an ETF, whether gold prices rise or fall. Of course, traders have to get the direction right,” said O’Neill.
As with all leveraged ETFs, the products are intended for use only by investors who understand the risks associated with seeking daily leveraged investment results and plan to actively manage their positions in the funds. Many sophisticated, active traders use products such as these to hedge positions in their current portfolios, while others use them tactically in an attempt to take advantage of the volatility.
Both funds come with estimated expense ratios of 1.56%.