What does Reverse Gold ETF mean?
A type of reverse ETF that tracks the Gold rates and is traded on reverse of the Gold index. Reverse Gold ETFs are designed to trade in a direction that is diametrically opposite to gold bullion. They are generally used by investors to hedge against a downward move in gold prices, or by speculators to make profit in a bearish gold market. It is also known as Short Gold ETF, Inverse Gold ETF and Bearish Gold ETF.
Futures Knowledge Explains Reverse Gold ETF
One can hedge downside risk of Gold portfolio by using inverse or short gold ETF options. If the gold rates the Gold rate falls by 5%, the Short Gold ETF rises by 5%. Short Gold ETF has all the benefits of short selling in a bearish market. This has potential to make profits with limited risk. The maximum loss is limited to the purchase price.
Some examples of Short Gold ETFs are ProShares UltraShort Gold and Direxion Daily Gold Bear 3X Shares (BARS).