NUGT ETF

Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods.

The jobs data was hotter than expected, which accentuated the higher for longer situation that the US finds itself in. For gold, which offers no direct cash yield and costs to keep custody of, this is bearish. Miners are correlated to gold, and we think that while mostly already assumed, a belligerent inflation figure may cause some more downside action.

NUGT: Bullish Gold Miners Heading Into April, Improved Momentum

Gold prices have the potential to rally higher due to global economic and geopolitical uncertainties. The $2,000 level has become a key resistance level for gold, but if it breaks, prices could soar. Gold mining shares via Direxion Daily Gold Miners Index Bull 2X Shares ETF offer leverage and have historically outperformed gold during bullish periods, making them an attractive investment option.

Direxion Daily Gold Miners Index Bull 2X Shares NUGT was spiking about 3.5% higher on Tuesday, continuing to fly north within a rising channel pattern on the daily chart.

Owners of the Direxion Daily Gold Miners Index 2x Bull ETF can create leverage of 3x to 5x the typical value changes in gold bullion in a bull upmove. Gold mining stocks could see a significant price reversal higher after years of stagnant to declining returns. Inverted gold and silver lease rates (nearby premiums) in the futures market indicate very tight physical supplies during August.

Gold production is higher than gold consumption, which might be a reason for gold prices not skyrocketing, despite the current uncertain economic scenario. Even if gold prices go up, NUGT may not be the best option to capture it due to the complexities involved and extreme volatilities inherent in a leveraged ETF. Due to effects of compounding, over a period of time, there can be startling differences between the performance of benchmark and that of leveraged ETF.

Direxion Daily Gold Miners Index Bull 2X Shares NUGT was rising more than 1% on Tuesday in tandem with spot gold, which was moving about 0.5% higher, possibly on new warnings a recession may be in the cards.

The global transition to alternative energy sources is feeding into early strength for critical minerals. Demand may rise over the coming years.