Gold prices have fallen 3.6% this year after falling ~1.9% in 2018, significantly underperforming broader markets. As of April 24, the S&P 500 (SPY), Dow Jones Industrial Average (DIA), and NASDAQ Composite (QQQ) had gained 16.9%, 14.0%, and 23.0%, respectively. Whereas markets have gained with the Fed backing down from its hawkish stance early this year and optimism growing on US-China trade, gold prices have been weak. Investors flocked to risk assets and shunned safe-haven assets.
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A leveraged play
Gold miners are usually a leveraged play on gold prices. Last year, for example, gold prices (GLD) fell 1.9% and the VanEck Vectors Gold Miners ETF (GDX) fell 9.3%. However, the GDX has almost matched GLD’s gains this year. Leveraged gold ETFs such as the Direxion Daily Junior Gold Miners Bull 3X ETF (JNUG) and the Direxion Daily Gold Miners Bull 3X ETF (NUGT) have fallen even more this year, by 17.7% and 8%, respectively.