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Top10 Precious Metals ETFs

With inflation pressures either rising or falling and with the dollar in decline, it's important to have portfolio exposure to precious metals. Why? Currency debasement and paper money in general have recently been disrespected making them an essential part of any portfolio. Easy monetary policies which began in 2008 have hurt the value of the dollar. Since most commodities are priced in dollars this puts upward pressure on prices which becomes inflationary. We've cobbled some good choices precious metals ETFs and ETNs where repetitive choices may exist but leave it to investors to pick the ones that suit them best. 

As a former CTA (Commodity Trading Advisor) and CPO (Commodity Pool Operator) I know the value of having an allocation to direct energy ETF/ETNs. In fact I was involved with trading precious metals in the late 1970s when the previous spike in gold and silver took place. As meteoric as most precious metals markets have become it remains essential to have exposure if nothing else for insurance protection against poor global fiscal and monetary policies. Uniquely, most ETF/ETNs offer unleveraged exposure to these products as opposed to having to trade directly with futures contracts and leverage.

As with previous ETF issues, our technical analysis methodology involved evaluating monthly charts but we also utilize weekly charts to fine tune positions. The latter circumstance is due to the unique nature of commodity contracts. Most futures contracts to which ETF/ETNs are linked expire quarterly. To be effective, direct commodity investing requires investors to be more active although investors in gold in particular view the asset now as a long term hold. Nevertheless, we're willing to trade them with the trend being out sometimes when it was more prudent to stay in with hindsight. We do this because we've seen large price changes over the years and remaining sanguine about this sometimes aren't an option. Therefore, it pays to be active and utilize a combination of weekly and daily technical charts to manage risk.

We recommend longer-term investors stay on the right side of the 12 month simple moving average while looking at monthly views. When prices are above the moving average, stay long, and when below remain in cash or short. But as stated previously, we also monitor weekly charts for signals that trends may become exhausted. In this circumstance we include and use Tom DeMark indicators from both weekly and monthly chart views.

Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

Four risk factors should be considered:

·         The CFTC's varying considerations regarding commodity position limits as applied to the assets of ETF and ETNs--still in limbo.

·         Recently commodity exchanges have raised margin requirements to limit speculation.

·         The credit quality of ETNs given these are "notes" many guaranteed by Barclay's and Deutsche Bank.

·         Backwardation (back month contracts lower than front month) and Contango (back months higher than front month) can negatively affect contract rollover for investors.  

·         Since most commodities trade in dollars, the value of the dollar can positively or negatively affect price behavior.

·         Frankly, the rise in many precious metals, particularly gold, is much disliked by the powers that be since it's a negative vote by investors on their stewardship of fiscal and monetary conditions. As a result they may take actions to restrain price rises where and when they can.

ProShares, Direxion Shares and Deutsche Bank feature inverse and leveraged long/inverse ETNs for those investors wishing to hedge or speculate.

We rank the top 10 ETF by our proprietary stars system as outlined below. However, given that for the most part we're dealing in single commodity focused issues, rankings may come down to competitive fees, structure and inherent volatility of the linked precious metal. If an ETF you're interested in is not included but you'd like to know a ranking send an inquiry to support@ETFDigest.com and we'll attempt to satisfy your interest.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach. Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

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