Market jitters brought on by rising inflation and geopolitical concerns on the Russia-Ukrainia border are pushing prices for gold as well as silver higher.
When uncertainty enters the capital markets, it can be an opportune time to get safe haven exposure. Gold and silver can provide these shelters from the proverbial market storm that could result from heavy volatility, especially in the major stock market indexes.
“Traders and investors are showing keener risk aversion to start the trading week, as the U.S. says Russia could invade Ukraine any day now,” a Kitco News article says. “The uncertainty on the matter is likely to continue to run high, as the U.S. response to a Russian invasion of Ukraine is a wild card—running the gamut of the U.S. slapping more sanctions on Russia, to participating in a full-blown ground war in Europe.”
With rising inflation will come rising rates by the Federal Reserve. That should typically give bearish undertones for gold and silver, but they could move higher in tandem with a stronger dollar given the current market landscape.
“We had multiple days in the last couple of weeks in which we saw safe haven plays into the dollar and gold concurrently. So while it would pressure gold, it would hold back the rise but [would not] necessarily be so strong that gold moves gold with that adversity,” said Gary Wagner, editor of TheGoldForecast.com.
Precious Metals Exposure Via ETFs
Rather than physically holding the commodity, investors can opt for exchange traded funds (ETFs), which give investors exposure to the precious metal with the dynamic ability to buy and sell their positions like stocks in the open market.
One way to get gold exposure is the Invesco DB Gold (DGL). DGL seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Gold Index Excess Return plus the interest income from the fund’s holdings of primarily U.S. Treasury securities and money market income less the fund’s expenses.
For investors looking to get silver exposure, one option is the Invesco DB Silver Fund (DBS). DBS seeks to track the DBIQ Optimum Yield Silver Index Excess Return, which is intended to reflect the changes in the market value of silver. Additionally, the fund holds Treasury securities, money market mutual funds, and T-bill ETFs for margin and/or cash management purposes only.
For more news and information, visit the Innovative ETFs Channel.