This financial instrument represents a leveraged exchange-traded fund (ETF) focused on companies involved in the exploration and production of gold, specifically those that are smaller in market capitalization compared to major gold producers. The “3x” indicates that the fund aims to deliver three times the daily percentage change of its underlying index, typically composed of junior gold mining companies. As an example, if the index increases by 1%, the fund intends to increase by 3% on that specific day, before fees and expenses.
Its appeal lies in the potential for amplified returns compared to non-leveraged investments in the same sector. This characteristic can be particularly attractive when anticipating upward price movements in gold or the junior gold mining sector. Historically, such instruments have offered opportunities for substantial gains during periods of positive market sentiment toward precious metals. However, the leveraged nature also significantly elevates the risk of losses, especially during periods of market volatility or decline, due to the potential for daily compounding effects and the risk of margin calls.
