Trade Gold With 3 Times Leverage Using REX Shares's SHNY And DULL ETNs

Volatility appears to be a constant for markets in 2023 so far and perhaps beyond. The Federal Reserve's monetary tightening stance has helped cool down inflation, but it has also placed immense financial strain on businesses. After 70% drops in names like Netflix NFLX in 2022, the market is now being faced with the capitulation of financial institutions like Silicon Valley Bank in 2023. 

The Fed's mission to take inflation down to 2% via hiking interest rates appears to be in question as many market analysts believe this aggressive route may lead to the downfall of other financial instructions. Amid these developments, gold seems to have emerged as a safe haven and a guard against uncertain times – the commodity has risen 14% between November 2022 and February 2023. Analysts believe gold may continue to play a major role as an investment until current market problems are solved. Gold generally has an inverse relationship to the stock markets, and there have been multiple historical events where economic turmoil triggered a rally in the price of gold such as the 2008 financial crisis.

Getting In – Tactically Trading Gold With REX Shares

The MicroSectors™ Gold lineup of exchange-traded notes (ETNs) by REX Shares is a potential avenue to explore for traders looking to take advantage of gold’s safe-haven status. Based on exposure to the SPDR Gold Shares ETF, REX Shares ETNs provide investors with 3x leverage and -3 inverse leverage to gold. Both ETNs, “SHNY” (3x leverage) and “DULL” (-3x leverage), are listed on the NYSE ARCA exchange and are currently available for trading. 

REX Shares stands out because the company says it is the only 3x leveraged gold product in the U.S., offering a way to tactically trade gold. With a focus on precision and ease of use, REX Shares offers opportunities in targeted niches with high liquidity.

By using leveraged ETNs such as those offered by REX Shares, traders have the opportunity to participate in the upward and downward movements of the gold market. The SHNY ETN, for example, provides three times the daily return of the SPDR Gold Shares ETF, while the DULL ETN provides three times the inverse daily return of the same ETF. The graph below shows periods when purchasing REX Shares’ ETNs could’ve generated impressive returns.

Graph showing the SPDR Gold Shares ETF’s performance versus standard gold and silver ETFs. Source: MicroSectors. 

The graph above shows how the SPDR Gold Shares ETF has historically generated far larger returns than industry benchmarks iSilver Shares Trust and SPDR S&P500 ETF Trust. Using SHNY ETNs, investors could’ve had access to 3x leverage on the SPDR Gold Shares ETF, which, at its height, generated 200% returns. Furthermore, buying REX Shares’s DULL ETNs during the 2020 drop could’ve helped investors generate alpha while general market participants reeled in losses.

REX Shares LLC's gold ETNs offer traders a unique opportunity to trade gold and potentially generate alpha. With the current market volatility, gold remains an attractive safe-haven asset, and investors may consider incorporating gold into their portfolios. However, it is crucial to understand the risks associated with leveraged ETNs before investing.

Read more about REX Shares’s ETNs here. 

Featured Photo by Zlaťáky.cz on Unsplash

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