Smart exchange traded fund (ETF) investors not only look for opportunities in areas that are currently moving up, but they also look for opportunities that may develop in the future, long before they’re actually here.
The credit crisis and the housing bust will both eventually work themselves out, and we’re probably in the worst part of it right now. Here are some areas you should consider. Go ahead and think we’re crazy. But these are some areas that when things get better, we may come back to you in six months and tell you that these areas have had a great run.
Of course, the standard advice applies: make sure you only buy when these areas move above their long-term trend lines (200-day moving averages).
First, two pretty obvious areas:
Gold, a traditional safe haven for investors, rose on such buying after bank woes were renewed, report Moming Zhou and Myra P. Saefong for MarketWatch. The metal closed at $894.40 an ounce, and gold-focused ETFs were among the few closing today in positive territory.
- SPDR Gold Shares (GLD), up 8.8% year-to-date and 5.7% above its trend line
- PowerShares DB Gold (DGL), up 6.9% year-to-date and 5.3% above its trend line
If the dollar continues to strengthen as it did today, however, it might temper gold’s rise. The two tend to have an inverse relationship: as gold rises, the dollar falls, and vice versa. Some analysts feel that gold’s rally is yet to come and that it could hit $1,000 by year’s end. Today could be the beginning of it as investors’ nerves are rattled by the failure of the $700 billion financial bailout package.