$iShares Silver Tr(SLV.US) barely moved, while $Microsectors Gold Miners 3x Leveraged ETN(GDXU.US) dropped by more than two points—on days when gold prices are ranging, mining leverage bleeds first.
The US dollar surged to its highest level since February, suppressing precious metals with no resistance, but silver spot holdings haven't loosened at all. The temperature difference between the physical side and the leveraged side is becoming increasingly obvious.
The decay of leveraged products in a ranging market is a mathematical issue, not an opinion one; wear and tear happens every day. Before gold prices pick a direction, is it worth holding 3x leverage waiting for a breakout? The answer is likely no—it's more expensive to suffer decay than to miss the rally. Wait for the breakout confirmation before adding leverage.
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