Gold BUGS Index (HUI)
What it is:
How it works/Example:
The Gold BUGS is made up exclusively of mining stocks that do not hedge their gold positions more than a year-and-a-half into the future.
The Gold BUGS is comprised of 15 of the nation's largest unhedged gold mining stocks. It is a modified equal-dollar weighted . As a result, most of the 's component stocks are equally weighted with the exception of a few of the largest stocks, which are more heavily weighted.
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Why it matters:
The Gold BUGS and the Philadelphia Gold and Silver (XAU) are the two most watched gold indices on the market. HUI is more volatile.
When gold prices are on the rise, the Gold BUGS provides an excellent way for investors to capitalize on that increase. The has a high correlation to the spot price (current price) of gold.
When the price of gold declines, the Gold BUGS tends to fall much faster than its hedged cousin, the XAU. In addition, the firm's unusual weighting system can be difficult to understand.
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