Short Gold ETF

Gold has had a historic rise in the past 10 years. Since hitting a 22 year low of $257, it has risen more than 400% reaching a recent high of $1432.50 in December 2010. Is this historic bull run about to come to an end? Golds rise resembles the last three big bubbles of the past decade. The tech bubble of 2000, the housing market crash and the oil spike of 2008.

Equity market performance has played a significant part for the recent rise. When there is uncertainty in asset markets investors tend to flock to safer investments such as gold. The U.S. currency has always been tied to gold with each moving in opposite directions. Weakness in the dollar was responsible for the 2009 run-up in gold prices. Gold is often referred to as as the ultimate inflation hedge, referring to its tendency to rise in value, during periods of significant inflation. Inflation remains low and gold continues to rise. Gold is not reacting the way it should in the current economic environment

What is an EFT? An ETF is an exchange traded fund that holds assets such as stocks,commodities,or bonds and trades on a stock exchange just as a stock would. Inverse Gold ETFs are a way to gain inverse exposure to gold. They are a better suited investment vehicle than the commodity itself. Gold commodities are extremely volatile and not suited for anyone not well funded and educated in the dangers of the commodities market.

Short Gold ETFs

There are a number of ETF options for exposure to short gold.

PowerShares Gold Short (DGZ)

This ETF is based on the Deutsche Bank Liquid Commodity. It is designed to reflect the price of gold futures contract plus the returns from investing in 3-month U.S. Treasury Bills. Since its inception DGZ has had a perfect inverse correlation with GLD (GLD is the most popular Long Gold ETF)

PowerShares Gold Double Short ETN (DZZ)

This ETF is based on the same underlying factors of (DGZ), It is leveraged at 200% rather than the 100% offered by (DGZ). This ETF is volatile. but can amplify gains in a declining gold market.

ProShares UltraShort Gold (GLL)

Similar to (DZZ) in that is also 200% inverse. Due to the compounding of daily returns, (GLL) returns over periods of time other than one day will differ in amount and direction from the target return for the same period. Investors should monitor this holding daily. Better suited for active investors who closely monitor there portfolio daily.

Other Short Gold ETF Options

Investors can also short sell other gold ETFs

SPDR Gold Shares (GLD)

The most widely traded and popular gold ETF. Currently holds 1,259.33 tonnes of physical gold which is its sole asset.

Market Vectors Gold Miners ETF (GDX)

Invests in gold mining companies throughout the world, offering exposure to to large cap companies. The profit of gold miners is directly linked to gold prices, taking a short position in this ETF gives investors inverse exposure to gold and other precious metals.