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Forum - Direxion Daily Junior Gold Mine - JNUG   

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From: cjlupard (Rep: 72) reply to jonnybDate: 04/02/2020 18:39
Forum: Direxion Daily Junior Gold Mine - Msg #2111Thread #674139800 (Rec: 0)
You cant compare JNUG to gold.... JNUG works on GDXJ.......Not spot gold price, GDXJ has been cut in half, thus JNUG at 4$...... You want ETF for spot gold then use GLD or leverage with UGLD... Thats the bottom line Re: This was $105.00 a share Feb.24. Gold was $1700.00. Gold is now $1650.00 ...



Reply to jonnyb - Msg #2831281 - 04/02/2020 18:29

Re: This was $105.00 a share Feb.24. Gold was $1700.00. Gold is now $1650.00 and ...

Lost my butt in leveraged erf’s 10 years ago.

Leverage Reset
A high expense ratio is at least transparent. What many investors don’t recognize is that leveraged ETFs are rebalanced daily. Since leverage needs to be reset on a daily basis, volatility is your greatest enemy. This probably sounds strange to some traders. In most cases, volatility is a trader’s friend. But that's certainly not the case with leveraged ETFs. In fact, volatility will crush you. That’s because the compounding effects of daily returns will actually throw off the math, and can do so in a very drastic way.

For example, if the S&P 500 moves down 5%, a fund like the SSO should move down 10%. If we assume a share price of $10, the SSO should be down to about $9 after the first day. On the second day, if the S&P 500 moves up 5%, over the two days the S&P 500 return will be -0.25%. An unaware investor would think the SSO should be down 0.5%. The 10% increase on day two will bring shares up from $9.00–$9.90, and the SSO will, in reality, be down by 1%. It decreases a full four times the decline of the S&P 500.

https://www.investopedia.com/articles/financial-advisors/082515/why-leveraged-etfs-are-not-longterm-bet.asp

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