Novice Precious Metals Investors Can Try The “DBP” ETF

It’s difficult to ignore the precious metal gains, especially during the height of the Covid-19 pandemic that saw gold and even silver reach record highs. For the novice precious metal investors, they might want to get a little bit of everything with exchange-traded funds (ETFs) like the Invesco DB Precious Metals Fund (DBP).

DBP seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Precious Metals Index Excess ReturnTM (DBIQ Opt Yield Precious Metals Index ER or Index) over time plus the income from the Fund’s holdings of US Treasury securities, money market funds and T-Bill ETFs, less the Fund’s expenses. The Fund is designed for investors who want a cost-effective and convenient way to invest in commodity futures.

Additionally, the Index is a rules-based index composed of futures contracts on two of the most important precious metals ” gold and silver. The Fund and the Index are rebalanced and reconstituted annually in November.

DBP Chart

Where Does Gold Go From Here?

When it comes to precious metals investing, gold is typically the bellwether, but where does the commodity go from here? Is there more upside ahead or will the precious metal suffer from a rallying dollar?

Per a MarketWatch report, gold “has moved in line with the dollar’s strength absent other catalysts of late but some longer-term investors believe that a resurgence of the pandemic and the belief that the viral outbreak may lead to further global fiscal stimulus has been considered a boon for bullion.”

“Ultimately, gold will benefit as Europe unleashes more stimulus and as investors grow comfortable with a slight pause in aid from Washington DC,” wrote Edward Moya, senior market analyst at Oanda, in a note.

Gold prices will also be determined by not only what goes on in Europe, but obviously the economic situation here in the U.S., such as unemployment claims.

The report also noted that “European leaders are meeting to discuss the coronavirus pandemic as well as trade talks with the U.K. with the Brexit transition period expiring at the end of 2020. Gold prices had initially moved higher after data Thursday revealed that the number of Americans who applied for jobless benefits in the week ended Oct. 10 rose by 53,000 to 898,000–the highest level in seven weeks.”

“The significant increase in the unemployment claims is another warning sign for the U.S. lawmakers to get their act together,” said Naeem Aslam, chief market analyst at AvaTrade. “The sad fact is that this situation is only going to get worse if we do not get any help in terms of another stimulus package.”

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