Market Turmoil Offers Fuel For Both Direxion's Bull And Bear Junior Gold Miner Funds

While gold historically – and pejoratively among some circles – may have been considered a "barbarous relic" by many, investors have a tendency of running toward its yellow-tinted covering when circumstances get shaky. As a universal store of value, gold seems to lack the pizzazz of other investments for some. Still, when inflation becomes a dominant concern, the commodity tends to shine brightly.

To be sure, plenty of cynical catalysts are on tap that could potentially buttress the price of gold bullion. First and foremost is the latest consumer confidence report as it relates to the dilemma of rising prices. This economic benchmark took a bigger-than-expected hit in February due to anxieties centered on rising inflation. Specifically, the one-year inflation outlook jumped to 4.3% –  up one full percentage point from last month.

Another indicator that raised eyebrows was long-term inflation expectations, which edged up to 3.3%. Notably, this metric stood well above the pre-pandemic range, heightening concerns that the challenges connected to rising consumer prices may persist longer than previously anticipated.

Another cynically bullish catalyst for the precious metal is the geopolitical realm, particularly due to global trade tensions. Recently, the U.S. has imposed tariffs on major trade partners, including Mexico, Canada and China. Such a strong action so early into the second Trump administration has created a cloud of economic uncertainty. Still, this backdrop has inspired investors to consider the safe haven of gold-focused funds.

On the other hand, not every element aligns so favorably for gold. For example, investors are rethinking their expectations regarding the Federal Reserve's rate cut policy following the aforementioned unexpected surge in inflation expectations. Furthermore, the return of global trade protectionism could lead to even higher costs for everyday goods. It's possible that the central bank could adopt a hawkish response, which may then threaten gold's remarkable bull run.

Also, recent reports suggest that while the asset itself has climbed skyward, gold miners have lagged this success. Headwinds such as rising labor costs and foreign government pressures – along with inflation – have crimped profitability, raising doubts about their ability to play catch up.

The Direxion ETFs: With ample room for bullish and bearish angles, this diverse arena offers relevance for Direxion's bull and bear funds for the junior mining sector. For the optimists, they can select the Direxion Daily Junior Gold Miners Index Bull 2X Shares JNUG. This exchange-traded fund seeks the daily investment results of 200% of the performance of the MVIS Global Junior Gold Miners Index.

On the other end of the scale, pessimists can choose the Direxion Daily Junior Gold Miners Index Bear 2X Shares JDST. Similar to JNUG but for bearish trades, JDST tracks 200% of the inverse performance of the aforementioned benchmark index.

Both the JNUG and JDST ETFs offer traders a convenient mechanism to speculate that doesn't involve the complexities of options trading. With these leveraged ETFs, a market participant can simply buy units of these funds, much like a standard publicly traded security.

However, investors should realize that exposure to these specialized financial products is meant for no longer than one trading session. Positions held for longer than recommended may experience value decay due to the daily compounding effect of leverage.

The JNUG ETF: Thanks to the broader excitement in the gold market, the JNUG ETF predictably responded well, gaining 101% over the past 52 weeks.

• At the present juncture, JNUG is positioned favorably, with the price action firmly above its 50 and 200-day moving averages (DMAs).
• Moving forward, it's critical that the bull fund continues to make progress as it's quite close to the $50 psychological support line.

The JDST ETF: Easily one of the poorer-performing ETFs, the JDST fund lost more than 70% of market value over the past one-year period.

• Contrary to its bullish counterpart, the 50 and 200 DMAs are acting as resistance overhangs, thus imposing skepticism.
• Nevertheless, JDST is starting to look interesting for the bears, gaining 2.5% on Tuesday. Their next immediate target is the $22 level, followed by the psychologically significant $25 barrier.

To learn more about Direxion's Daily Junior Gold Miners Index Bull and Bear 2X Shares, click here.

Featured photo by Soofia Tailor on Pixabay.