In our Research om Gold Mining ETFs we came across Direxion Daily Gold Miners Bull 3x Shares. What stood out was the abysmal performance vs the market. We plot the performance over the last 12 month and it has underperformed the market, in this case Dow Jones Industrial Average by almost 80%.
It is important to note that there is nothing wrong with the ETF it self. NUGT is doing exactly what it is designed to do. Providing 3 times the return of a portfolio of gold mining stocks. The issue we are highlighting is when you pick the wrong sector to invest in plus using significant leverage. In this instance 300% of the original capital there is almost zero margin of error. You could argue some would went with the bear version and made the reverse 80% outperformance but hindsight is 20/20.