International Gold 3X Inverse: An Overview
The International Gold 3X Inverse (ticker: GLDI) is an exchange-traded fund (ETF) that provides three times the inverse return of the spot gold price. This means that when the price of gold rises, GLDI falls in value by a factor of three. Conversely, when the price of gold falls, GLDI increases in value by a factor of three.
GLDI is designed for investors who believe that the price of gold is going to decline. It offers a way to bet against gold without having to purchase physical gold or futures contracts. GLDI is also a popular hedging tool for investors who have large gold positions and want to reduce their risk.
How GLDI Works
GLDI uses a variety of financial instruments to achieve its inverse return. These instruments include swaps, futures contracts, and options. The fund’s managers use these instruments to create a portfolio that is designed to move in the opposite direction of the gold price.
GLDI’s investment objective is to provide investors with -300% of the daily return of the spot gold price. This means that if the price of gold rises by 1%, GLDI will fall by 3%. Conversely, if the price of gold falls by 1%, GLDI will rise by 3%.
Risks of Investing in GLDI
GLDI is a leveraged ETF, which means that it uses borrowed money to amplify its returns. This can lead to significant losses if the gold price moves in the opposite direction of what you expect.
GLDI is also subject to tracking error. This means that the fund’s actual return may differ from -300% of the daily return of the spot gold price. Tracking error can be caused by a number of factors, including the fund’s expenses and the liquidity of the gold market.
Conclusion
GLDI is a powerful tool for investors who believe that the price of gold is going to decline. However, it is important to understand the risks involved before investing in this fund. GLDI is a leveraged ETF, which means that it can amplify your losses as well as your gains. GLDI is also subject to tracking error, which means that its actual return may differ from -300% of the daily return of the spot gold price.
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