Saturday, March 28, 2009

Surfing the Gold

As a self-described conservative long-term investor, today's topic of discussion is the opposite of conservative or long-term: volatile and short-term. Specifically, the topic is “Horizons BetaPro TSX Global Gold Bull Plus ETF”. This is a Canadian based ETF that trades on the Toronto Stock Exchange (TSX). It acts like an index of two times (200%) the daily performance of the S&P/TSX Global Gold Index. The S&P/TSX Global Gold Index tracks gold producers (as opposed to gold the commodity).


"Horizons BetaPro HBP ETFs are a unique series of alternative exchange traded funds ETFs used by investors and investment professionals to profit when the market is rising or falling, or to reduce risk by hedging their existing market exposure. HBP ETFs offer two types of structures: Bull+/Bear+ leveraged ETFs and single inverse ETFs. The HBP Bull+ ETFs HBP ETFs are designed to offer double the daily performance (inverse daily performance) of their underlying index or benchmark. … All HBP ETFs are denominated in Canadian Dollars.


HGU is the “bull” ETF for gold producers. As a double performance ETF HGU is volatile, as evidenced by the one month chart below ...

yes, this is a static picture of stock chart because in 2009 there seems to be no easy way to embed a Canadian stock chart. despite the multitude of gadgets out there, they appear to only accept US stock symbols

Check out the stock chart on Google Finance

The Inspector is recommending this ETF as a trade (not as an investment). The trick is to buy this and sell a portion of the holding on a regular basis. The concept is to surf the chart’s ups and downs. In a just a few days, this ETF can move 10-20%. It represents a good opportunity to make a little bit of side money, away from core holdings of a portfolio.

Gold companies and the commodity have been on a general up trend. None the less, as mentioned, the chart is choppy. Do not buy this ETF unless you understand the concept fully. In general, gold is a nice hedge to have in an equity portfolio, and the HGU ETF is a nice way to add some dollars to a suffering equity portfolio.



DISCLOSURE: The author buys and sell units of HGU on a regular basis.

As always, do your homework and read between the lines.

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