May 20, 2013
The stock price for Tesla Motors (NasdaqGS:TSLA) has been a rocket ship, but one ETF has more zip.
The Direxion Daily Gold Miners Bear 3x Shares (NYSEARCA:DUST) is beating the year-to-date (YTD) performance of Tesla by more than 100%* and has posted a gain of more than 250%. By comparison, Tesla has gained 170%* YTD.
The bear market in gold (NYSEARCA:GLD) and silver (NYSEARCA:SLV) prices has crushed mining stocks, which has resulted in mammoth gains for bears.
DUST aims for triple daily inverse or opposite performance to mining stocks (NYSEARCA:XME). That means if mining stocks fall by 1% in a single trading session, DUST should be up 3% or close to it.
The relative performance differential between mining stocks and the S&P 500 (NYSEARCA:SPY) is especially staggering. While the S&P is ahead by 12.53% YTD, the Market Gold Miners ETF (NYSEARCA:GDX) is down more than 40%. Also, gold miners have substantially underperformed physical bullion.
DUST is an ETF that’s familiar to our readers.
In our Weekly ETF Picks from February 14, we warned about deep trouble in the precious metals market and a high profit opportunity on the short side.
“A double digit slide for gold would likely translate into a 20%+ loss in mining stocks. This scenario offers some big upside potential for bears.”
Since then, DUST has surged more than 170% in value.
ETFs that use 200% (2x) and 300% (3x) are best used as short term trading instruments, rather than buy-and-hold investments.
Our latest video, “Tips for Making Short and Leveraged ETFs Working for You,” explains some of the key differences between these types of funds versus ETFs that don’t attempt to magnify performance.
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*Through the market close of May 17, 2013