These ETFs Have Survived The Rough Commodities Trade

A weaker dollar and some precious metals has has the relevant exchange traded funds (ETFs) performing admirably this year. The major physically-backed gold ETFs are sporting double digit year-to-date gains while the comparable palladium fund is setting a torrid pace.

The major physically-backed silver ETFs aren't doing too poorly, but their year-to-date gains are just over 6 percent. That has not been enough to get investors excited about the metal and it has hardly been enough to foster confidence in silver mining ETFs.

Of the two most widely followed non-leveraged silver miners ETFs, one a large-cap fund and the other focusing on junior miners, the year-to-date results are hardly awe-inspiring. The better of the two, the large-cap ETF, is up 4.4 percent this year while the junior miners fund is lower by 2 percent. In either case, those performances are not enough to reward investors for the volatility often associated with silver miners.

Where To Turn

When miners spend time lagging the performance of the underlying metal, that situation can potentially worsen in significant, volatile fashion. For short-term traders, that could spell opportunity with the Direxion Daily Silver Miners Index Bear 2X Shares DULL.

DULL, which debuted almost a year ago, attempts to deliver double the daily inverse performance of the Solactive Global Silver Miners Index. That index “includes a minimum of 20 and a maximum of 40 stocks of US and foreign companies active in exploration, mining and/or refining of silver, including stocks of small- and medium- capitalization companies,” according to Direxion.

Under no circumstances should an ETF like DULL be treated as a buy-and-hold instrument, but the bearish silver miners play is doing its job. Over the past month, DULL's underlying index is down more than 2 percent while the ETF is higher by 6 percent. Traders are embracing DULL, too. For the five-day period ended Aug. 21^st, the ETF's volume was more than 173 percent above its trailing 20-day average, according to Direxion data. 

DULL's Bullish Cousin

DULL has a bullish relative, the Direxion Daily Silver Miners Index Bull 2X Shares SHNY. That ETF is designed to deliver double the daily returns of the aforementioned silver miners index.

Volume in SHNY has also recently been well above average and the ETF has averaged modest daily inflows over the past month, according to issuer data.

Related Links:

An Alibaba ETF.

How To Trade Leveraged ETFs. 

Photo credit: public domain