3X Leveraged Gold: One Year Later

VelocityShares 3x Long Gold ETN linked to the S&P GSC Gold Index (NYSEARCA:UGLD)

It should come as no surprise that the bull half of this pair has fared much better as far as investor attention is concerned. VelocityShares 3x Long Gold ETN linked to the S&P GSC Gold Index (NYSEARCA:UGLD) has about $46 million in assets and trades a solid 65,000 shares each day. With more and more investors hopping on the gold train, UGLD has been able to reap the benefits. Still, it should be reiterated that this fund is primarily designed for active traders and can be a dangerous hold over the long term [see also Under the Hood: How GLD Works].

Since inception, UGLD is down 7.6%. Of course, this is where some may scratch their heads wondering why the fund was not up 25%, the opposite performance of its bear counterpart. Leverage product returns will always differ over the long term based on their respective resets, which is the main reason why investors need to be very careful about holding them in the long term. VelocityShares 3x Long Gold ETN linked to the S&P GSC Gold Index (NYSEARCA:UGLD) is an ETN and has incurred no tracking error; it has tracked its index perfectly since inception. For an in-depth explanation of how leveraged returns work in the long run, check out this article outlining the leveraged silver ETF.

This article was originally written by Jared Cummans, and posted on CommodityHQ.