If you are looking for a double short gold ETF, one of your best options is going to be GLL. This popular ETF trades an average of 642,000 shares per day. Its inception was in late 2008, at the height of the financial crises. Since then, it’s been beaten down from a high of almost $30 to a current price of $9.45. While that might be a ‘beat down,’ it’s still extraordinarily impressive considering the run gold has had in that time frame. Better yet, it began to flat-line in October of 2009. This was during a phase of enormous volume. Translation: the selling is exhausted. The price of this short ETF gold fund cannot be pushed down much farther. The upside greatly outweighs the downside. GLL is also near a 52-week low of $8.45. Pushing below that would be a shock. Wise investors might be averaging down here on the buy side.
Why short gold in this environment? Slowly but surely, the government is removing economic stimulus. This should lead to a pullback in the red-hot stock market we have witnessed in the past 12 months. In addition to that, the government will also be paying down debt. That, combined with weaker economies in the Euro Zone, will lead to a stronger dollar. This is bad for gold and good for a double short gold ETF like GLL.
While many people might love gold here, it’s most likely near the top of its range. Keep in mind that everyone loved technology in early 2000, loved real estate in 2004, loved oil in the summer of 2008, and loved stocks in early 2008. Sometimes, there’s too much love going around. Once everyone is overly excited about an investment, it’s usually time to get out. If gold does crash and you own GLL at the time, you could make a killing. Is it a long shot? Maybe, yet definitely one worth considering. Before making any investment decisions however, you’d be wise to consult with a reputable financial advisor. It’s all too easy to get hammered in this volatile market.