With each passing day there grows more and more speculation that global markets are headed for another downturn. One of the favorite theories of investors and analysts is that all of the bailouts and quantitative easing programs have acted as a cover up for the deep-seeded issues in our economy; once the Federal funding stops, those issues will return to the foreground. As such, a number of individuals are trying to decide how to best play the commodity market for the next financial meltdown. Below, we outline five ETFs to help you profit from the financial world’s demise [for more vital commodity updates subscribe to our free newsletter].
SPDR Gold Trust (GLD)
This was a fairly obvious choice, as many analysts and individuals suspect that gold will be the real winner from these inflated debt levels. This ETF invests in physical bullion and is one of the largest funds in the world, weighing in with over $60 billion in AUM. It should be noted that many investors and bloggers are skeptical as to whether or not this fund actually holds gold, or is a “paper” asset. We further explored that issue here. If you are wary of ETF investing or just not a fan of GLD, you can always purchase physical bullion to satisfy your exposure needs.
iShares Silver Trust (SLV)
The other precious metal, silver, is another popular choice for a market fallout as it also tends to be a safe haven investment. This ETF features a physical exposure to spot prices of silver and trades hands over 10.7 million times each day. It should be noted that silver has heavier ties to the industrial sector than gold, so its price could take a hit based on weakness in that market segment (typically one of the first to go in a recession). Silver is not as sure-fire of a bet as gold, but it is traded less heavily, so its prices are not subject to the market manipulation that gold endures [see also 25 Ways To Invest In Silver].
3x Inverse Natural Gas ETN (DGAZ)
First things first, this fund is meant only for trading. Holding DGAZ for an extended period of time could leave you on the receiving end of a very sour trade. That being said, when recessions roll around, natural gas typically takes a hit (as it did back in 2008). This fund applies an inverse 3X leverage on NG futures, allowing it to produce massive gains in a weak environment for this fossil fuel. Again, DGAZ is a very dangerous tool that should only be utilized by active traders who fully understand the risks that go along with investing. That being said, this fund may offer you overwhelming potential to produce strong capital gains.
2x Gold Bull/S&P 500 Bear (FSG)
Another trading tool, FSG offers a unique spin on gold prices. Half of the portfolio’s assets go long in gold, while the remainder short the S&P 500, all with a 200% leverage. In essence, this fund tracks the spread between gold and this massive benchmark. When markets begin to take a nosedive, and if gold is able to hold its ground, this fund will be an even more lucrative option than investing in the precious metal itself. Remember, it is intended for traders who fully understand its dangers, so the average investor should steer clear [see also Why Buffett is Dead Wrong on Gold].
S&P 500 VIX Short-Term Futures ETN (VXX)
No, volatility is not technically a commodity, but its futures prices are often lumped in the same category with a number of other popular hard assets, so we thought we would include it. VXX is quite literally built to prey on weak markets; if there was ever a crash, this would be one of the best ETNs to own, hands down. Tracking front-month VIX futures, VXX is yet another trading instrument that can make or break you depending on your knowledge going into the position. To give you an idea of this fund’s potential, the VIX is currently sitting below 20. Back in 2008, that index surged to nearly 70, leaving room for a stellar investment decision.
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Disclosure: No positions at time of writing.
[...] Stocks markets around the globe kicked off the week on a dismal note as intensifying pressures over Europe’s debt drama welcomed back the bears on Wall Street. Gold and oil tanked alongside major equity indexes as concerns over rising yields on Spanish and Italian government bonds prompted officials overseas to impose a temporary ban on short-selling. On the homefront, investors digested lackluster corporate earnings from McDonald’s, which missed estimates thanks to slow growth across U.S. stores [see also 5 ETFs To Own During The Next Market Collapse]. [...]
[...] SP Global Timber Forestry Index Fund (NYSEARCA:WOOD): This ETF measures the opening of companies intent in the ownership, management, or upstream supply sequence of forests and timberlands. With approximately 35 holdings, this account splits the resources uniformly between domestic and general stocks. The account is home to over $150 million in resources and trades around 9,300 times per day. WOOD pays out a division produce of 2.3% and has gained more than 35% in the trailing 3 year duration [see also Five ETFs To Own During The Next Market Collapse]. [...]
[...] It is no secret that grain prices have been soaring as a number of savvy commodity investors have been cashing in on the latest trend to take the world of hard assets. Many are also aware that a nation-wide drought has been the culprit of said price rises. But while the drought has been widely covered, few realize just how severe it has been. For starters, the trailing 12 months have been the hottest on record for the U.S. since records have been kept (dating back to 1895). Combine that with the lack of rain in the past few months and you have the worst drought seen in nearly 70 years, putting a major pinch on the prices of a number popular commodities [see also Five ETFs To Own During The Next Market Collapse]. [...]
[...] The VelocityShares 3x Inverse Natural Gas ETN (DGAZ) had an incredible ride today, gaining a whopping 11.45% during the session. As natural gas futures tumbled to its lowest close in a month, this ETN gapped significantly higher at the open, only to inch higher throughout the day. DGAZ settled just below its high of $29.75 a share [see also Five ETFs To Own During The Next Market Collapse]. [...]
[...] One thing that often is overlooked by investors are the tax ramifications of physical silver investing [see also Five ETFs To Own During The Next Market Collapse]. [...]