Short and Long Gold

Gold had a great run over the last 3 years. Today's asking price is $904.80 an aounce. That is about 112% gain from the level of $426.9 on May 11, 2005 when we advised our readers to accumulate Gold. Consequently, the immensely popular Exchange Traded Fund (ETF), StreetTracks Gold Shares (GLD) , that holds actual gold bars, had made all its buy-and-hold investors happy.

However, a fear of downturn is gripping the mind of gold investors. The ETF, GLD lost about 11% from the peak it achieved on March 17th following the Federal Reserve's rate cut and inflation warnings.

As a result, ETFs that short future prices have started gaining value in the midst of all these. In late February, Deutsche Bank listed a trio of gold ETNs, which are similar to exchange-traded funds or ETFs, on the NYSE Arca. The following two are for shorting Gold:
o DB Gold Short ETN (DGZ) which provides investors the monthly inverse performance of gold, plus the bond collateral return.
o Deutsche Bank Gold Double Short ETN (DZZ) doubles down on futures prices and thus gains twice as the price falls.

But if you still strongly believe in the future run of Gold, Deutsche Bank also has another ETN for you in their Gold basket. The "double long" note, DB Gold Double Long ETN (DGP) is designed to give two times the monthly return of gold. But, remember, if the Gold price falls, it would hurt you twice as much.

All three ETNS have annual expenses of 0.75%.