This is where Direxion Daily Gold Miners Bear 3X ETF comes in to play. The ETF is a triple-leveraged inverse of the gold miners index. The miner’s corresponding index, the Market Vectors Gold Miners ETF, is down around 40% year-to-date, and more than 50% from the 52-week high. By contrast, the Direxion’s Daily Gold Miners Bear ETF is the best- performing ETF of 2013, up almost 60% year to date, and up nearly sixfold from the 52-week lows.
The Daily Gold Miners Bear ETF is a good buy to profit from a prolonged drop in commodity prices, particularly gold. However, given the fact that triple leveraged inverse ETFs are typically designed for extremely short term holdings, it might not fit in to the risk profile of many investors.
Many gold mining companies have overextended their reach by pursuing major gold projects worldwide while amassing billions in debt. Purchasing the Direxion’s Daily Gold Miners Bear ETF can prove to be extremely profitable.
Silver Wheaton Corp. (USA) (NYSE:SLW) is a buy? Seriously?
It might seem strange to recommend a commodity mining company, especially one with silver in it’s name. Silver Wheaton Corp. (USA) (NYSE:SLW) stands out amongst the commodity companies due to its extremely smart business moves to hold long- term contracts to purchase silver at prices substantially below the market price.
The company provides an upfront payment to miners for the right to buy their finished silver product. The deal is a win-win, as miners are happy to accept a lump-sum payment upfront, while Silver Wheaton Corp. (USA) (NYSE:SLW) benefits from the long-term viability over the lifetime of the mine.
Silver Wheaton Corp. (USA) (NYSE:SLW) has very recently gained a bargaining edge in negotiating its deals in this commodity-pummeled environment. Silver Wheaton can still earn a profit even with rapidly declining silver profits. The company at the very least should not be lagging physical silver, as it has over the past three months. Investors can reasonably expect the company’s shares to rise, reflecting the disparity between them and physical silver.
Commodities are likely to continue declining over the coming weeks and months. Equities are likely to continue increasing over the coming weeks and months. Investors that are able to profit from this trend will be rewarded generously. As mentioned previously, there is no correlation between commodities and equities, and it is within reason and perfectly normal to see commodities decline and equities rise.
The article Commodities Are Dead, But Equities Are Very Much Alive originally appeared on Fool.com and is written by Jayson Derrick.
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