Betting Against the Miners has Banked Massive Coin

Goldfinger - Gold Overdose James Bond

The miners have been killed and the reverse miner ETF have profited.

Gold and silver miner stocks have been crushed in the past 3 months. Sure you could try and play the bounce or find the low but it has proven costly. So what has done well while these stocks continue to zero?  That would be the bearish miner ETFs that jump for joy when the miners stock tank.  Cue the  Direxion Daily Gold Miners Bear 3x Shares ETF (DUST) and Direxion Daily Junior Gold Miners Index Bear 3X Shares ETF (JDST).

Both the DUST and JDST have pulled back since hitting their 52 week highs. These bearish ETFs have destroyed all equites since the summer.  The JDST increased 300% and the DUST over 200% but have since cooled.  Could this mean that the bad times are finally behind the gold and silver miners?

Who knows.  What it does show is that volatility is all over these ETFs and individual stock names.  

The JDST showed up late last year but YTD both these names are down.  The JDST down 63% YTD and the DUST 21%.  These are short term trades meant for professionals or high frequency trading robots that can catch the moves.  For the average Joe Investor these can break you.  Just like trying to trade the VXX which has lost its popularity after cleaning out so many portfolios since 2008.   

The point of this article is to make you aware that these instruments do exist and can be played if done so with caution.  If you would have bought in summer when the movement starting going higher in these bearish ETFs and believe that the miners were in doom.  Congrats.  Such is the case frequently with the gold and silver miners.  When they get kicked in the balls they get a Bruce Lee kick, followed by the U.S. Soccer team, and finally JCVD spinning kick.


Mastery Bottom line: Rather then bet on individual miner stocks or the bullish basket ETFs. Watch when they start tanking and gamble 5% on the bearish miner ETFS via DUST or JDST.  Trying to catch the bottom and go long on the miners is worse than catching razor blades with your mouth.