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Short Gold ETFs

A Hedge Against Falling Gold Prices

Written by Luke Burgess
Posted February 8, 2016

Gold is off to a hell of a start in short etf etn

For the year, the yellow metal has already tacked on gains of almost 10% as the Fed signaled interest rates are likely to stay low.

Meanwhile, sales of physical gold bullion remain strong. The U.S. Mint reported sales of 124,000 ounces of American Eagle gold bullion coins in January — an increase of 53% over a year ago.

And while I remain bullish on gold in the mid to long term, I think it might be wise to pull the reins back just a bit on the gold horse right now.

A Gold Bug Shorting Gold?

I've said it many times...

I'm not a traditional “gold bug.” I'm not a survivalist. I don't own gold because I think the dollar and/or U.S. economy is headed for a total collapse. I don't endorse a return of a gold standard or any kind of gold-related ideology.

I'm only into gold for one simple thing: money... cash money.

I don't want to get married to gold. I just want to date it for a while.

So I have no problem ever taking profits off the table or even shorting gold in the short term when I see the opportunity — which is why I'm writing to you today...

In the past week alone, the price of gold is up nearly 4% to over $1,165 an ounce. But over the next several days, I expect a correction on profit taking down to $1,120 or lower.

gold price chart 0216

With that in mind, I think we have a good opportunity to make a quick 10% (or higher) gain with a short position in gold.

The easiest play with the highest potential yield is one of the inverse gold ETFs. For a reserved short position, check out...

ProShares UltraShort Gold ETF (NYSEArca: GLL)

Gll 0216 gold short etf

The ProShares UltraShort Gold ETF provides two times short exposure (-2x) to the performance of gold bullion as measured in USD for delivery in London. GLL is a good ETF for short-term hedging against the fall of gold prices.

For a more aggressive short position against gold, check out...

VelocityShares 3x Inverse Gold ETN (NYSEArca: DGLD)

Dgld 0216 gold short etf

The VelocityShares 3x Inverse Gold ETN investment results correspond to three times the inverse (-3x) of the performance of the S&P GSCI Gold Index, an index of gold futures.

Investors should note that these gold ETFs are extremely volatile. But for our purposes, we just want to be in and out of them for a quick profit.

As I mentioned, I expect gold prices to pull back this week and maybe into next week. Leverage yourself for the immediate term now.

Good Investing,

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Luke Burgess
Energy and Capital

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