VelocityShares last week (10/17/11) added new ETNs linked to the performance of +/- 3x gold and silver futures and +/- 2x palladium and platinum futures. These are the first ETPs providing U.S. investors with this magnitude of precious metals leverage.
The sponsor firm is a relatively new arrival in the U.S. market, launching eleven months ago with a suite of six volatility-linked VIX ETNs. Both the volatility suite and new precious metals suite are exchange-traded notes (“ETNs”) issued by Credit Suisse. As such, they are unsecured debt obligations that carry the credit risk of Credit Suisse.
VelocityShares 2x Inverse Palladium ETN (IPAL) is linked to -200% (inverse) the daily performance of palladium futures via the S&P GSCI Palladium Index ER with a 1.65% investor fee [IPAL fact sheet (pdf)].
VelocityShares 2x Inverse Platinum ETN (IPLT) is linked to -200% (inverse) the daily performance of platinum futures via the S&P GSCI Platinum Index ER with a 1.35% investor fee [IPLT fact sheet (pdf)].
All these ETNs track indexes of precious metals futures contracts - not the physical or spot price of the metals. As such, their performance is subject to contango and backwardation effects resulting from the term structure of the underlying indexes.
Disclosure: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.