The Direxion Daily Gold Miners Bear 3X Shares (NYSE:DUST) surged more than 25% on Tuesday, as a massive precious metals sell-off sent gold mining stocks to multi-month lows.
Gold miners had been among the best performing stocks of 2016 through the first half of the year. The rally had stalled as of late, however, amid shaky gold prices and the overcrowded nature of the gold bull trade.
Gold prices pulled back more than 3% in afternoon trading, while silver was off more than 5%, hitting multi-month lows. Both of these developments are wreaking havoc on mining stocks, which plays into DUST’s benefit.
It’s unclear exactly what is causing today’s big precious metals sell-off, but rumors of the ECB tapering its bond purchases certainly aren’t helping matters. Much of gold and silver’s rally this year has been on the back of massive central banking accommodation around the globe, including ultra low interest rates and trillions of dollars in asset purchases.
If that well continues to dry up, precious metals — and their mining counterparts — could be in for a very rude awakening.
DUST shares rose $9.21 (+25.86%) to $44.83 in Tuesday afternoon trading. Year-to-date, DUST has still plummeted more than 94%, as its triple leveraged nature has led to outsized losses.