Direxion's NUGT, DUST ETFs Facilitate Speculation For The Red-Hot Gold Market

Earlier this year, gold reaching $3,000 represented a moonshot target. Back in October 2024, Bank of America's commodity analyst Michael Widmer caused a stir, noting that the precious metal could reach the aforementioned price due to rising concerns over U.S. fiscal policies and their potential impact on Treasury yields.

What made the bullish call conspicuous at the time was that gold had just hit a new record, landing at $2,696 per ounce. However, Widmer's forecast represented a more than 11% swing from what was an all-time high. Remarkably, throughout 2025, the precious metals complex has demonstrated sustained resilience.

Currently, gold is trading hands at over $4,500, a fresh record that has pushed the precious metal's total market value to roughly $31.5 trillion. That makes gold almost seven times larger than Nvidia Corp's (NASDAQ:NVDA) entire market value. As billionaire investor Jeffrey Gundlach pointed out, capital is aggressively flowing into the world's oldest store of value, implying that investors are actually hedging the biggest tech boom in history.

Now, J.P. Morgan Global Research expects gold prices to push towards $5,000 next year, with a possible long-term scenario calling for $6,000. Even more startling, this forecast isn't built off the hype train of recency bias. Instead, the banking giant's analysts believe that macro factors such as central bank purchases could bolster the price. In addition, mining companies have been slow to respond to rising prices, indicating the prospect of a positive rerating.

Speaking of the mining complex, it should be noted that it may take up to 18 years for a project to be fully productive. Because of the rising difficulty of extracting precious metals at a time when advanced industries like artificial intelligence are rapidly consuming critical resources, supply constraints can cause upward pressure on commodity prices.

Still, not everything is aligned positively for gold and sector-related enterprises. For one thing, the commodities space in general is very volatile compared to blue-chip equities. Furthermore, the underlying mining complex may respond to other pressures that have nothing to do with the gold bull market, such as operational setbacks or even labor disputes.

Another challenge involves the heightened non-ergodicity in the gold market. Colloquially, ergodicity is the likelihood that the actual return of an investment matches its expected average return over a given period of time. Non-ergodicity represents a mismatch between the actual and average return.

For stable, blue-chip equities, non-ergodicity typically is only a theoretical concern. However, for leveraged and synthetic exposure to volatile gold markets, non-ergodicity can easily disrupt portfolio exposure. That's because funds with exotic exposure dynamics can lock in volatility, thus making recovery unusually difficult.

The Direxion ETFs: Thanks to the heightened environment in the precious metals space, there's ample opportunity for speculators to place wagers on both sides of the sentiment aisle. To that end, financial services provider Direxion offers two countervailing products.

For the optimists, the Direxion Daily Gold Miners Index Bull 2X Shares (NYSE:NUGT) ETF seeks the daily investment results of 200% of the performance of the MarketVector Global Gold Miners Index. On the other hand, the Direxion Daily Gold Miners Index Bear 2X Shares (NYSE:DUST) seeks 200% of the inverse performance of the aforementioned index. 

Primarily, the purpose of the NUGT and DUST ETFs is to deliver a convenient mechanism for speculation. Typically, those who seek leveraged or inverse positions must engage the options market, which may require complex tactics that might not align with every investor's interests. With Direxion ETFs, the underlying transactions are straightforward, debit-based trades, thereby mitigating the learning curve.

Still, prospective participants should be aware of the unique risks that these specialized products pose. First, leveraged and inverse funds tend to be more volatile than standard vehicles tracking benchmark indices like the S&P 500. Second, Direxion ETFs should not be held for periods lasting longer than one day. Structurally, the reason centers on the compounding of volatility, which can lead to positional erosion.

The NUGT ETF: Since the start of the year, the NUGT ETF has gained 477%. In the past six months, the bull fund has gained over 166%.

• Thanks to resurgent momentum, NUGT finds itself above the 50- and 200-day moving averages. It's also above the 20-day exponential moving average.
• One element to watch closely is volume. Since late October, accumulation has faded while the price action has risen, which is contradictory to what most bullish traders look for.

The DUST ETF: From the January opener, the DUST ETF has slipped 90%. In the trailing half-year period, it's down almost 72%.

• While DUST did see a momentum swing in late October to early November, the bulls eventually overpowered the pessimists.
• Still, what's very interesting is the volume trend. Since September, accumulative volume has generally risen, which may indicate a pivot toward contrarianism.

Featured image from Shutterstock

This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.