Replies to post #6151 on Direxion Daily Gold Miners Bull 2X (NUGT)

[Stocknawe]

Hi NR,

There is the decay theory which professes that commodity ETF's, such as NUGT, inherently lose value over time, which I can neither confirm nor dismiss. I know from reading the prospectus of NUGT, that a resetting process occurs after each trading day, which in itself may result in diminishing it's value, thus explaining the decay that we hear so much about lately. It seems that many rationalize the purported effects of decay by correlating the historical valuation of NUGT with gold. I have traveled that path as well in an attempt to find a plausible indicator for NUGT. True enough, the best indicator to project or explain the trading direction of NUGT is the price of gold. NUGT is a great trading vehicle when the the two [gold and NUGT] are in synch with each other. However, there are times when gold is up and NUGT is down and vice versa. This leaves many of us scratching our heads in frustration, often concluding that it is virtually impossible to draw an accurate or consistent measure of valuation of NUGT with the present or past value of gold. :)

SA