3 High-Risk, High-Reward Gold ETFs You May Be Missing

Key Points

• Gold prices have hovered between $3,200 and $3,500 for several weeks after rallying for the better part of 18 months.
• Despite achieving all-time highs multiple times since 2024, gold may have room to continue to gain value if external factors remain unchanged.
• GDXU, JNUG, and SHNY are high-risk, high-reward leveraged ETFs providing bullish exposure to gold via either gold mining stocks or a non-leveraged ETF holding gold bullion.

The price of gold has fluctuated between about $3,250 and $3,450 since mid-April, a change from the long-term rally extending all the way back to the beginning of 2024. With the precious metal setting all-time record high price points many times in the last 18 months, this change in trajectory brings about additional uncertainty: Can gold continue its upward trend? Or will this mark a plateau before a price drop comes?

Investors adopting a bullish view of gold might argue that many factors driving its price increase in recent quarters have not yet changed. Central banks have continued to buy up gold to hedge against an unpredictable U.S. economy and dollar; inflation concerns remain rampant, and the broader geopolitical landscape is still fraught. Investors who believe that gold will continue its surge and have a high risk tolerance could look to three high-risk, high-reward gold-focused exchange-traded funds (ETFs) to make a big bet on the metal.

Triple Bullish Leveraged Exposure to Gold Mining Firms

The MicroSectors Gold Miners 3X Leveraged ETN NYSEARCA: GDXU is one of two funds by MicroSectors that track the S-Network MicroSectors Gold Miners Index, which is itself comprised of two broad gold mining ETFs. Together, the index and GDXU take a broad view of gold mining stocks, including companies across a range of market capitalizations and geographies.

GDXU takes an extreme bullish view of the index's performance over a single day, offering 3X leverage. By contrast, its counterpart, the MicroSectors Gold Miners -3X Leveraged ETN NYSEARCA: GDXD, takes the exact opposite approach and offers -3X leveraged exposure over a single day. This means that investors expecting a very short-term spike in gold mining firms (which tend to be aligned with the price of gold) might multiply those benefits with an equally short-term investment in GDXU. However, the risks are high: losses will also be amplified, and triple leverage is particularly aggressive. GDXU has a fairly high expense ratio of 0.95% and is only intended to be traded within a single day, not to be used as a buy-and-hold investment.

2X Leveraged Access to a Subset of the Mining Market

If GDXU is either too expansive in its focus on the entire gold mining industry or if the triple leverage is too extreme, investors might consider a narrower target in a fund such as the Direxion Daily Junior Gold Miners Index Bull 2X Shares NYSEARCA: JNUG. Targeting the MVIS Global Junior Gold Miners Index, which is made up of small-cap companies deriving at least half of their revenue from gold or silver mining, JNUG focuses on the smaller end of the mining space.

Investors may choose to target small-cap miners if they feel that these companies are more likely to see big price shifts coinciding with changes to the price of gold or silver. While gold mining is dominated by a handful of big firms, the wide geographic distribution of operations also means that there is a sizable number of smaller companies in the space as well. To gain 2X leverage on an investment in these firms with JNUG, investors should expect an expense ratio of 1.02%. While the risks are not quite as high as they are with GDXU, they do remain, and investors should also plan to hold JNUG no longer than a single trading period.

Triple-Leveraged Exposure to a Gold Bullion-Focused ETF

The MicroSectors Gold 3X Leveraged ETN NYSEARCA: SHNY, like GDXU above, provides triple-leveraged exposure. Where this fund differs, though, is in its target, the SPDR Gold Shares ETF, which invests in gold bullion. Thus, while SHNY is not a direct investment in gold, it is closer to that than a fund focused on gold mining stocks.

SHNY is also similar to GDXU in that it carries an expense ratio of 0.95% and is designed only for single-day investments, as the leverage resets daily. SHNY may, therefore, be a good option for investors seeking targeted leveraged exposure to gold, in addition to other investments directly in bullion or indirectly via a fund that holds physical gold.