Asset managers that deal heavily in exchange traded funds (ETFs) are taking defensive stances on the current market and buying hard, tangible assets like gold and commodities.
Gold is, and has always has been the most traditional safe haven. As lawmakers are working out a plan to save financial markets, many people want to know where to put their money. One thing is for certain: if inflation rises, food and energy are going to become that much more expensive, reports Trang Ho for Investor’s Business Daily.
Keep in mind that base metals can underperform in a recession, and if Treasury prices drop , there is another place you can place your bets. The bailout package, whatever it consists of, will cause a lot more Treasury debt in the markets. Some analysts think the yield curve will steepen and cause short rates to stay low, and long rates to rise.
Our strategy remains that we will look at those areas of the markets that are moving and are above their trend lines (the 200-day moving average). We do consider other factors, but for a fund to be considered, it must be above this point.
Some funds that give investors exposure to these “safe haven” areas include:
- SPDR Gold Shares (GLD), up 8.6% year-to-date
- iShares COMEX Gold Trust (IAU), up 8.5% year-to-date
- iShares Lehman 20+Year Treasury Bond (TLT), up 7.7% year-to-date
- iShares Lehman 1-3 Year Treasury Bond (SHY), up 4.1% year-to-date
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.