Double Gold ETF is defined as the leveraged ETF which moves up or down which is equivalent to twice the movement of the price of Gold either ways. To illustrate further we can say that once the prices of Gold rise by 10% the price of Double Gold ETF would rise by 20%. On the other hand when the prices of Gold falls by 10% the price of the Double Gold ETF falls by 20%. Last few years the investment in the Double Gold ETF has considerably increased with the gold prices touching new heights.
Moreover it should be noted that although this is lucrative and provides good returns the risks are much higher. It is therefore recommended for people to invest after thorough research and technical analysis before they actually invest in these. No one actually knows how the Gold prices may fluctuate especially the normal investors which is the reason people say that informed as well as intelligent investment is very important for investments such as the Double Gold ETF.
No doubt the returns are way much better if the game is played safe and invested at the right time. But it is equally dangerous when there is a fall in the prices as you might end up making a big loss. Therefore considering the fact that the Gold prices are extremely volatile, many believe that it should be only reserved for those seasoned investors who are not that averse to risk which involves them risking a very small portion of their entire portfolio.
With all those in mind in the times of financial turmoil where most of the financial markets crashed and incurred big losses for the past few years Double Gold ETF has actually turned out to be a winner for many of the investors. Moreover the best part which is believed is that Gold still has something in it to touch a new high after which it might start shelling out some of its gains and correct its price levels. In case you are an investor who has the capacity to take extra risk then you could invest in a Double Gold ETF or a Double Gold ETN. A Gold ETN i.e. exchange traded note is very similar to the Gold ETF but with the difference that in case of an ETN the investors need to hold the debt security till the date it matures. On maturity the issuer gives the principal amount to the investor. Thus we can say ETN has the characteristics of both a bond and an ETF.
The 4 main double gold ETF and ETN are:
- ProShares Ultra Gold ETF: This Double Gold ETF moves at the double pace against the change in gold prices and has been designed for the investors who invest long in gold as an investment.
- ProShares Ultra Short Gold ETF: This Double Gold ETF moves at the double pace of the gold prices but in the opposite direction.
- PowerShares DB Gold Double Long ETN: This ETN moves at a double pace against the gold price and has been designed for long gold investments.
PowerShares DB Gold Double Short ETN: This short ETN moves at a double pace against the gold price movement but in the opposite direction.ADVERTISEMENTS