ABOUT Leverage Shares 3x Long Gold ETP Securities
This entity provides investors with a leveraged exposure to the daily performance of gold. It aims to deliver three times the daily percentage change in the spot price of gold, before fees and expenses. This means that if the price of gold rises by 1% on a given day, the value of this security should, theoretically, increase by approximately 3%. Conversely, if the price of gold falls by 1%, the value of the security is expected to decrease by about 3%. It achieves this leveraged return through the use of financial instruments like swaps, which are derivatives contracts that exchange cash flows based on gold's performance. The product is structured as an exchange-traded product (ETP), meaning it trades on a stock exchange like a regular stock, allowing for easy access and liquidity for investors. Unlike owning physical gold, this method doesn't require storage or insurance and is easily bought and sold via a brokerage account. However, due to the leverage, this product also has heightened risks. The compounding effect of daily returns means that, over longer periods, the performance of this product might significantly differ from three times the overall change in the gold price. For instance, in volatile or sideways markets, the daily rebalancing of leverage can erode the value even if the underlying gold price eventually returns to its starting point. This makes it suitable for sophisticated investors who are comfortable with these higher risks and intend to use it for short-term tactical trading or hedging strategies, rather than long-term investment. It's crucial for investors to understand the daily reset mechanism and the impact of leverage, especially the potential for amplified losses, before considering this type of product. The inherent volatility and the daily rebalancing make it essential to regularly monitor the performance and understand the associated costs and risks.