In my case, the reason for owning DUST is simple: gold (and gold miners) perform poorly in deflationary environments as well as in strong economic environments. If the economy is in poor shape, then it will be a deflationary recession, not an inflationary one. If the economy is in good shape (not likely), then the Federal Reserve will raise rates, which will lead to U.S. Dollar appreciation and negatively impact gold. Additionally, the top gold miners held in the NYSE Arca Gold Miners Index consistently lose money.

Leveraged ETFs: How to Use Them and Not Lose Your Shirt | Investopedia

If you want a literal definition on how DUST trades, the following information can be found in its Fund Summary: “creates short positions by investing at least 80% of its assets in: futures contracts; options on securities, indices and futures contracts; equity caps, floors and collars; swap agreements; forward contracts; short positions; reverse repurchase agreement.”

Leveraged ETFs: How to Use Them and Not Lose Your Shirt | Investopedia

The gold miners’ stocks have skyrocketed this year as investors started returning to this long-abandoned sector. Many have doubled since January, with plenty tripling or even quadrupling. Naturally such fast gains raise concerns about whether they are actually fundamentally justified or merely the product of fleeting sentiment that could reverse. Gold miners’ latest quarterly results offer great fundamental insights.

Gold Miners’ Strong Qurterly Results Prove Their Stocks’ Big Gains Are Fundamentally Justified - Smarter Analyst

Given the extraordinary market events of the first quarter of 2016, it’s an exceedingly important one to understand what’s going on with the gold miners fundamentally. Q1’16 saw the flagship NYSE Arca Gold BUGS Index better known by its symbol HUI blast up a staggering 60.3%! While that was driven by gold powering 16.1% higher, the mining stocks’ 3.7x upside leverage to their metal was still quite high.

Gold Miners’ Strong Earnings Results Prove Their Stocks’ Big Gains Are Fundamentally Justified - Smarter Analyst

While real rates have historically had the most significant impact on gold’s performance, inflation, more particularly the direction of inflation, has mattered as well. The best years for gold were those in which real rates were low and inflation was rising. Since 1971 there have been 12 years that fit that description, as Bloomberg data shows. Gold rose in 11 of those 12 years with an average return of over 35 percent. Given slow growth, a cautious Federal Reserve and the proliferation of negative sovereign yields in Japan and Europe, U.S. real rates are likely to remain low for the foreseeable future. At the same time, both core inflation and wages have been firming while the inflation drag from last year’s strong dollar and collapse in oil is beginning to fade. This is exactly the type of environment that has historically been most favorable to gold.

Conditions look favorable for gold - Business Insider