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Gold M&A Outlook Changes, The Direxion Shares Exchange Traded Fund Trust Lower

The Direxion Shares Exchange Traded Fund Trust (NYSEARCA: NUGT ) was down on Wednesday as the market for the metal remains rocky as traders look for clues about the Federal Reserve’s decision making in the months ahead. Meanwhile some firms in the industry are seeing the collapse in the price of the metal as a reason to go on a spending spree. Oceana Gold Corporation ( OTCPK:OCANF ) announced a $900m offer to acquire Romarco Minerals ( OTCPK:RTRAF ), on Tuesday. Larger gold makers are looking at weaker share prices as a reason to consolidate the industry. Mick Wilkes, CEO at Oceana Gold, says that “You have to stay at the dance and engage with opportunities as they come up.” Gold makers buy gold Last Friday Metals X Limited said that it would buy gold projects from RNI and Panoramic Resources. The firm’s CEO Peter Cook says that “When the market caps of some of the juniors are very low, that’s the time to make a corporate takeover.” Mr. Cook said that the costs and time associated with buying out smaller firms was the major factor keeping him from taking in more. “I’ve got five companies I’d like to have a crack at … but as soon as I do one I am paralyzed for six months from doing anything else,” he says. For those holding onto gold as a metal, the deals aren’t going to do much good. The price of the commodity has fallen massively in recent months as traders in the U.S. try to guess when the Federal Reserve will hike rates , and traders in China sell out in order to pay for the massive stock market declines. It also doesn’t seem to making much difference to those exposed to the metal through NUGT. The Direxion Shares Exchange Traded Fund Trust down Despite the spurring M&A movement in the gold world, there’s seems little chance of the NUGT moving higher. The number one factor that weighs on the shares of gold miners is the price of the metal, and that isn’t shifting higher. On Tuesday, as gold prices inched higher, Ira Epstein, a broker with Linn & Associates told the Wall Street Journal that “certain Fed members are getting hawkish.” He reckons that “The Fed wants to get aggressive and raise the rates, and that is going to give a bid to the dollar and that is going to be negative gold.” No one is able to tell where the price of gold, or that of the NUGT is going to head in the coming months. Recent price moves have, however, made traders much more wary of putting the metal in their portfolios. Calls for the price of gold to hit $800 or even $350 haven’t helped matters, but it seems that there are big issues in the market. Firms like Oceana Gold Corporation, and Metals X are going to take advantage as long as prices stay low. Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

VelocityShares 3X Long Crude ETN Hurts As Brent Dips Below $50

The price of Brent oil fell to less than $50 per barrel on Monday evening for the first time in six months. The move is being seen as confirmation that an era of moderate oil prices is taking over as world supply outstrips demand . Those with shares in some ETFs tracking the black liquid won’t be happy to hear it. The VelocityShares 3X Long Crude ETN (NYSEARCA: UWTI ) linked to the S&P GSCI Crude Oil Index Excess Return has lost more than 95 percent of its value over the last year. The ETF is leveraged and multiplies the gains or losses in the oil market by three times. It’s been all losses for the last twelve months, and traders have felt it. Oil prices head lower On Monday the price of a barrel of Brent hit below $50 for the first time in six months. Back in January the benchmark tested $45. David Hufton of PVM told the Wall Street Journal that: The prospects of a second half-year price rebound have evaporated and there is a clear and present danger of prices revisiting the previous lows of the year. Barclays says that there is little sign of a slow down in the production of oil by its metrics. Its index of oil-pumpers covers about 40 percent of the world supply. With the market moving in the wrong direction for those long the VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return, it’s clear that there could be further pain ahead. VelocityShares 3X Long Crude ETN pain mounts VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return is a popular instrument for betting on movement in the oil market, but those who were looking for gains have been badly wounded by the price movements in recent months. After the awesome fall in the price of oil at the end of 2014 and the beginning of 2015, many traders thought that closing rigs in the US and unrest in the Middle East, couple with higher demand from economic recovery in the US, would boost the price. That held true for a short period before expectations of supply from Iran, and a fall in activity in China this Summer brought about a run in the opposite direction. The price of a barrel of Brent tested a low of $45 the last time oil prices were compressed by the market outlook. It’s not clear if they’re heading toward that level again. Bank of America analyst Sabine Schels says “The market is very skeptical of shale production declines.” The price of oil is likely to fall further, says Schels, because pumpers don’t seem to be cutting down on their output. BMI research says “A retest of Brent crude’s 2015 low around $45 per barrel looks inevitable given current ample market supply and intensifying bearish market sentiment toward prices.” That’s bad news for any thinking about going long on the VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return. Share this article with a colleague

Bulls Weigh On Gold As Losses Mount In NUGT

The Direxion Daily Gold Miners Bull 3x Shares ETF (NYSEARCA: NUGT ) shares were down yet again on Friday morning after a day of huge losses on Thursday. Most of Wall Street has turned its back on gold as the U.S. heads toward a rate rise later on in 2015, and the risk of both inflation and deflation melt away. We’ve seen a wide range of negative outlooks on gold since the fall in the price of the metal began earlier in July. The bulls have, for the most part, stayed out of the limelight. There’s good reason for that. Most of those who are bulls now were bulls three months ago, and they’ve been proven wrong. Right now most are trying to rework their models or abandon gold altogether. Here’s what some of them are saying. Stepping back, doubling down, and staying quiet An old adage says to buy into gold as soon as the last bull has left town. We’re not sure if that’s true just yet, but it’s clear that many former gold bugs have left their positions and are trying to recover losses in the market. Jonathan Barratt, chief investment officer at Ayers Alliance has long been happy to put money in gold, but he’s turning against the metal right now. “From a technical perspective,” he told CNBC, “it doesn’t look hot.” He said that the price of the metal has “broken through some very critical areas.” On the other hand, some observers are doubling down on the metal. In a report published on July 3, Bank of America Merril Lynch forecasted that gold prices would rise to $1,300 in 2016 . “We are on the cusp of a bull market,” reads the report. The investment house says that “gold can be supported even if the U.S. central bank turns less accommodative, as long as the Fed just normalizes monetary policy.” John Paulson and David Einhorn, two hedge fund managers known for their bets on gold , will have to disclose their positions in ETFs and miners of the metal next month. The final date for 13F filings is on August 14. Then, or perhaps the day before, we’ll be able to see if gold’s big hedge fund fans are still backing the metal. Gold ETFs remain a danger Leveraged ETFs carry risks that don’t exist in pure metal trading. That’s why NUGT has lost more than 70 percent of its value in the last three months. There are very few outspoken Wall Street voices who will advise a bet on the ETF as a result. Leverage is dangerous, and it’s not for the faint of heart. The NUGT ETF tracks an index of gold mining shares and seeks to deliver returns of three times those on the index. The price of NUGT has become very separate from the price of gold as a metal in recent weeks as a result. Even gold bulls aren’t likely to advise a bet on the ETF. The risks are simply too great for all but the most thrill-seeking of traders. There’s no outspoken bulls of the index in the limelight, and there isn’t likely to be, at least until the price of gold turns around.