DEFINITION of 'Short Gold ETF'
An exchange traded fund that seeks to profit from negative changes in the price of gold. Each day, a short gold ETF's price is adjusted by -100% of the daily percentage change in the price of gold. The price of gold may be based on the price of a gold index, physical gold, gold futures contracts or gold mining stocks for a short gold ETF's purposes. An investor would buy a short gold ETF if he or she expected the price of gold to decline.
A short gold ETF may also be called an inverse gold ETF or a gold bear ETF.
BREAKING DOWN 'Short Gold ETF'
Short gold ETFs are intended as short-term investments. They require advanced investing knowledge and are not appropriate for beginner investors. Investors must monitor their holdings in short gold ETFs carefully because these products often use leverage, which can quickly magnify both gains and losses. Short gold ETFs can also experience wild fluctuations in price. An advantage of short gold ETFs is that they are easy to buy and sell. Unlike taking an actual short position in gold, buying a short gold ETF does not require the investor to maintain a margin account.