Posted at the Chartology Forum by Richard640<\/p>\n
this was posted by a ZH poster\u2026it makes sense and explains a lot of the illogical action in the individual shares, versus the metals and other shares recently
\n To offer some insights\u2026<\/p>\n
JNUG\/JDST are 3x derrivatives of GDXJ. NUGT\/DUST are 3x derrivatives of GDX. At \u2018this\u2019 level these leveraged ETF\u2019s don\u2019t mix so that specuulators can pick their poison.<\/p>\n
JNUG is heavily day traded and represents 53% of GDXJ\u2019s inflows\/outflows. So much so that GDXJ is having serious trouble keeping up with the volume. i.e \u2018they\u2019 have to actually purchase & sell those shares every day while JNUG just buys options\/futures on the single ETF it leverages. To bring more liquidity to their ETF, GDXJ now holds their own large cap ETF (GDX) as a top holding.<\/p>\n
JNUG, JDST, NUGT & DUST are SERIOUSLY distorting and damaging the entire Gold & Silver mining sector in ways that didn\u2019t exist back in the 2011 Gold bull market. Because of these 3x leveraged ETF\u2019s, top holdings of GDXJ get slammed around daily by day traders, while the miners not held by or at the bottom end, languish in obscurity (even if they\u2019re execellent picks). Regular rotation of these holdings also makes for unpredictible returns. For example, GDXJ might pickup a miner you own while Gold is in a down-trend and shit all over it. Then drop your miner once Gold turns around. Or vice versa if you\u2019re lucky.<\/p>\n
Whether you like it or not, virtually the entire PM mining sector is now the bitch of these 4 ETF\u2019s. So if you hold any individual miner, make it your business to know the stake GDXJ or GDX has in it; and at what point in Gold or Silver cycle they hold it. Real investing is neither simple nor straight forward\u2026and a lot of risk-on, bull market chasing, lemming investors are going to find that out the hard way.<\/p>\n
FYI beware of UGLD, DGLD, USLV & DSLV as well. Their movements tend to underperform their decay so are only useful for large short-term moves in Gold & Silver.<\/p>\n
As to what the end looks like\u2026.in a leveraged ETF\u2026God Knows\u2026but in an unleveraged one, the day it closes u shud get it\u2019s asset value\u2026..but will people panic out\u2026yes\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"
Posted at the Chartology Forum by Richard640 this was posted by a ZH poster\u2026it makes sense and explains a lot of the illogical action in the individual shares, versus the metals and other shares recently To offer some insights\u2026 JNUG\/JDST … Continue reading