More fears of a global economic slowdown could trigger increased defensive plays abound in precious metals, particularly gold followed by silver. This could see more action in exchange-traded funds (ETFs) like the SPDR Gold Shares (NYSEArca: GLD) and iShares Silver Trust (NYSEArca: SLV).
Traders can also take advantage of gold plays on miners through the VanEck Vectors Gold Miners (NYSEArca: GDX), the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG) and the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT).
“We think gold prices are going to continue to go higher on the back of a weakening dollar,” said Natixis analyst Bernard Dahdah. “Growth in the U.S. is going to slow as the country has reached full employment and productivity is very high so there isn’t much space for growth… And we are coming to an end of the Federal Reserve’s rate cycle which should weaken the dollar further.”
The precious metals have been stuck in a tight range, with gold trading between $1,200 and $1,400 an ounce. However, this year could finally see the yellow metal break resistance, followed by silver, said Logo Tiggre, founder and CEO of Louis James LLC in the video below:
For investors looking for continued upside in U.S. cyclical sectors over defensive sectors, the Direxion MSCI Cyclicals Over Defensives ETF (NYSEArca: RWCD) offers them the ability to benefit not only from cyclical sectors potentially performing well, but from their outperformance compared to defensive sectors.
Conversely, if investors believe that U.S. defensive sectors will outperform cyclical sectors, the Direxion MSCI Defensives Over Cyclicals ETF (NYSEArca: RWDC) provides a means to not only see defensive sectors perform well, but a way to capitalize on their outperformance compared to cyclical sectors.
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