My issue with leveraged ETFs is, quite simply, the 30,000 foot view of results: They suck. Even though NUGT and DUST are from the same fund company and purport

My issue with leveraged ETFs is, quite simply, the 30,000 foot view of results: They suck. Even though NUGT and DUST are from the same fund company and purport to do the opposite of each other, they both lost substantial amounts of muppet money over the last year!!! You're trying to analyze these things mathematically, I'm just saying "look at the actual results over a years time". I suspect (without checking in detail) that UGLD is doing better is because it's an ETN and not an ETF. Usually an ETN is a debt obligation of a financial counter-party, in this case Credit Suisse. How Credit Suisse manages their debt agreement (the ETN) is up to them. These can be black boxes to the outside world. It's possible that CS is buying or selling physical gold or gold futures to hedge their exposure, but they don't have to be. It's simply a financial contract. Right now CS is a good financial risk. But the same might have been said about Lehman Brothers before the great recession. They were counter-parties to some ETNs and people who owned those were screwed when Lehman went bust: https://www.etf.com/sections/features-and-news/lehman-bros-etn-fallout https://www.etf.com/sections/features-and-news/lehman-bros-e... I agree with you that a leveraged ETF they can simply borrow money to increase leverage. (Not much different from how leveraged hedge funds operate). But for some reason they don't operate that way. So it must be somehow advantageous for them to use futures. Maybe because it's difficult to "short" something like e.g. WTI crude in a standardized way on an exchange? You can be long or short a futures contract for gold or WTI, that's a liquid market. But shorting the physical commodity might be harder?