The risk on trade for gold miners was in full effect Wednesday as investors rushed into everything that glitters. With the precious metal itself up only 2%, it was again the miners that hugely outperformed.
The Direxion Daily Junior Gold Miners Index Bull 3X Shares (JNUG) which is a triple leveraged ETF exploded 33% to $7.61. This ETF is triple leveraged to the GDXJ which rallied over 11% on the day.
Note: The other side of that trade is the Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST) which collapsed 33.99% to finish the day at $13.07.
Once gold turned and began accelerating its gains, the TSX Venture followed suit. The world’s junior resource exchange gapped up almost 2% points, rising 14.41 points to close at 807.28 on total volume of 94,928,511.
Gold Miners Rebound from Recent Lows
Despite collapsing in late-2016, the bull market in gold stocks that began in January of 2016 is still intact. Check out the 5 Year Chart on the GDXJ below:
VanEck Vectors Junior Gold Miners (GDXJ) – 5 Year Chart
The GDXJ had its biggest day in over a month – rising 11.53% on the day.
The unlikely catalyst to gold’s move higher is revealed in Aaron Hoddinott’s latest article, titled Why the Fed’s Rate Hike Sent Gold Stocks Upward.
The Fed raised rates for the 3rd time in 11 years Wednesday. In the previous two rate hikes, gold dropped before the anticipated rate hikes, bottomed in the day or two following the hike and then traded sideways for a week before breaking out. This time, gold broke to the upside before, during and after Fed Chair Yellen’s announcement.
JNUG ETF tops Stocks in March Stock Challenge
The Direxion Daily Junior Gold Miners Index Bull 3X Shares (JNUG) easily captured the Daily Stock Challenge Breakout award. No other issuers came close in March’s Stock Challenge Wednesday.
Three Pinnacle members, including ‘briantannura’, ‘northern shoveler’ and long-time member ‘michelrbrunet’ selected JNUG for March’s Stock Challenge. While a favorite among many Challengers, when gold is falling JNUG can get crushed in a hurry.
Member briantannura outperformed all members Wednesday with a 27.64%. He has yet to crack the Top 50 and will need JNUG to keep outperforming. As all of our Challengers know, these leveraged ETFs can come out of nowhere when a sector such as gold stocks get hot.
Past Stock Challenge Champ ‘michelrbrunet’ put up a solid 22.76% return on the day. With gold stabilizing and moving higher, gold miners could have a major impact on the final two weeks of March’s Stock Challenge.