Make Big Bets on Gold With These 3 Leveraged Mining Funds

Globe and Mail

14-04-2025

The world's favorite precious metal reasserted its worth as a safe haven asset as markets tumbled in the first few days of April. As of April 4, 2025, the price of gold is up an impressive 30% in the past year and 14.5% year-to-date (YTD).
Meanwhile, as the S&P 500 plunged by 8.2% the week of March 31, 2025—due largely to the announcement of sweeping tariffs on imports from dozens of nations—the spot price of gold dropped by only 2.6% at the same time.
Increased day-to-day market turbulence and growing calls for a potential recession may prompt investors to exercise caution, and one way to do this is to rebalance portfolios toward defensive plays like gold.
And some investors might see an opportunity to make a bolder bet on the precious metal: a leveraged exchange-traded fund (ETF) or note (ETN). These investments can amplify gains but also have the potential to magnify losses for an overall high-risk, high-reward bet.
Three such exchange-traded products may appeal to investors seeking to capitalize on gold's rally indirectly —through the share prices of gold mining stocks, which tend to correlate movement with the price of the metal itself: GDXU,
GDXU: Broad, Triple-Leveraged Exposure to Gold Miners
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If you're looking for a single leveraged product that offers exposure to both large and mid-cap gold miners, consider the MicroSectors Gold Miners 3X Leveraged ETN (NYSEARCA: GDXU).
GDXU is an ETN —a debt instrument issued by Bank of Montreal. This means it doesn't hold physical assets but instead promises to pay returns based on its index. ETNs carry issuer credit risk, so investors are also exposed to the solvency of the issuing bank.
This ETN takes a unique approach to gold mining stocks by tracking the performance of the S-Network MicroSectors Gold Miners Index—which is itself composed of two major gold mining ETFs:
VanEck Gold Miners ETF (NYSEARCA: GDX): GDX focuses on large-cap miners and has a concentrated portfolio where top holdings can represent over 10% each.
VanEck Junior Gold Miners ETF (NYSEARCA: GDXJ): GDXJ targets smaller-cap mining firms but includes a few larger players and some that focus on metals other than gold. Its asset distribution is more balanced, with top holdings closer to 7%.
Between these two funds, GDXU provides investors with broad exposure to gold mining companies at multiple places on the market capitalization spectrum. GDXU tends to be more heavily weighted toward GDX, which is made up of larger firms.
GDXU provides 3x leverage, reset daily. This means daily gains in GDX and GDXJ are tripled, although investors must be cautious not to remain exposed to GDXU for a longer period, lest they risk diverging from the fund's intended results.
This makes GDXU a great choice for investors keen to amplify short-term spikes in the share price of gold mining firms. Its expense ratio of 0.95% is on the low side for 3x leveraged funds, an added bonus.
NUGT: A Concentrated, Double-Leveraged Bet on Top Miners
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The Direxion Daily Gold Miners Index Bull 2X Shares (NYSEARCA: NUGT) ETF tracks the NYSE Arca Gold Miners Index, which is the same index that GDX targets. This index is fairly concentrated in a handful of names, with the largest positions routinely occupying at least 10% of the portfolio.
This makes NUGT a targeted leverage play on some of the top names in the gold mining space.
NUGT is an ETF, meaning it actually holds the underlying assets—in this case, derivatives tied to gold mining stocks. This reduces credit risk and enhances transparency as ETFs don't rely on the solvency of an issuer the way an ETN does.
With an expense ratio of 1.13%, NUGT is not an inexpensive fund. Its 2x leverage also resets daily, making it ideal for short-term plays. Indeed, investors wishing for long-term exposure to the index may be better off trading in GDX shares directly—the expense ratio is significantly lower, and results won't be skewed due to compounding returns.
Still, for individual days in which the gold mining industry thrives, NUGT is a great choice to maximize gains.
JNUG: Aggressive Exposure to Junior Gold Miners
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For traders seeking high volatility and outsized returns from smaller mining companies, look to the Direxion Daily Junior Gold Miners Index Bull 2X Shares (NYSEARCA: JNUG).
JNUG offers 2x daily leveraged exposure to the GDXJ, making it a powerful tool for those looking to capitalize on sharp short-term movements in the junior mining space.
But keep in mind the risk level is high with this ETF. When you combine small-cap volatility with leverage, it can lead to large swings. That makes JNUG best suited for active traders who can monitor their positions closely rather than long-term buy-and-hold investors.
Because GDXJ includes a wider range of companies—some not exclusively focused on gold—JNUG also gives indirect exposure to the broader mining sector. This can occasionally soften or skew its correlation to the price of gold, especially in the short term.
With that in mind, JNUG may appeal most to traders who are not only bullish on gold but who also expect junior miners to outperform their larger peers during surges in the precious metals market.
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