Again, you are simply incorrect.
Dilution, according to investopedia is "a reduction in the ownership percentage of a share of stock caused by the issuance of new stock. Dilution can also occur when holders of stock options (such as company employees) or holders of other optionable securities exercise their options. When the number of shares outstanding increases, each existing stockholder will own a smaller, or diluted, percentage of the company, making each share less valuable. Dilution also reduces the value of existing shares by reducing the stock's earnings per share."
What you fail to understand is the ONLY TIME Direxion creates new share units (what you're mistakingly referring to as dilution) is when NUGT is trading at a premium to its indicative value. This occurs when supply/liquidity is lower than demand for shares. They create new share units in order to eliminate this premium, to keep the NAV of the fund equal to the IV of the fund. In other words - they create new shares when demand has driven the spot price of the fund above its actual value in order to make sure the fund is behaving according to its prospectus.
And you are also failing to acknowledge that they just as frequently REDEEM share units. They "buy up" shares anytime the fund is trading at a discount to its IV. Again, they manipulate the total number of outstanding shares in order to keep the NAV equal to the IV.
Bottom line? There is NO DILUTION THAT OCCURS.
