Monster Gains In 2012: Leveraged Gold vs. Leveraged Silver

Precious metals have become increasingly popular in recent years, as continued easing from central banksaround the world and escalating fear over the global economy has led to a massive inflow for these commodities. Though most are comfortable with your standard bullion or ETF, others bet big on these assets by utilizing leveraged funds. Thus far in 2012, both leveraged gold and silver funds have performed extremely well, making them an enticing play for traders who can stomach the risk associated with these products [for more gold and silver news subscribe to our free newsletter].

Deutsche Bank AG (USA) (NYSE:DB)

Leveraged Gold

The two leveraged benchmarks on gold come from the Deutsche Bank AG DB Gold Double Long (NYSEARCA:DGP) and the VelocityShares 3x Long Gold ETN linked to the S&P GSC Gold Index (NYSEARCA:UGLD). DGP applies a 200% leverage while UGLD features a 300% exposure for those who really want to put their money where their mouth is. DGP has about $550 million in assets (a healthy amount for a levered fund) while the more dangerous UGLD has just $55 million. UGLD’s low asset base should come as no surprise as it is designed as a trading instrument rather than a fund that investors will buy and hold over the long term.

So far in 2012 DGP has tacked on a solid 24% while UGLD is up 32%; compare that to GLD’s current gainsof 13%. The first thing investors will note is that neither DGP or UGLD are perfect leverages of the performance of gold. This always comes off as frustrating, but you need to keep in mind that when an asset has volatile returns (as gold has a tendency to move a fair amount each day), leveraged funds tend to look out of whack, although they are performing perfectly in regards to their reset times [see also Ten Tell-Tale Signs You’re a Gold Bug].

It is important to look at the reset frequency of a leveraged product so you will know how it will react to movements of this metal. Looking at the long term performance of a daily leveraged product will be incomparable to the baseline, as it is only meant to replicate day-to-day movements. Note that there are monthly and even lifetime leverages for those who are truly interested.

Leveraged Silver

For silver, the ProShares Ultra Silver (NYSEARCA:AGQ) and 3x Long Silver ETN (USLV) reign supreme. AGQ employs a 200% leveraged and USLV a 300% leverage. AGQ is by far the largest leveraged commodity fund with more than $965 million in total assets, an extremely high number for a leveraged fund. USLV, not surprisingly, comes in a bit lower, but still maintains a healthy $125 million.

Thus far on the year, leveraged silver has ousted the gold competition with AGQ and USLV jumping 36% and 42% respectively. Compare this to SLV’s gains of 22% and it is clear that these funds have been stellar on the year. Note that silver is more volatile than gold, and its big movements on the year are what account for these two products not being perfect long-term replications with respect to their leverage.

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

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!