Precious metals have been feeling the brunt of a strong dollar as the U.S. Federal Reserve continues to tighten monetary policy and push interest rates higher. That’s not to say that precious metals investors are down for the count as recession fears loom.
With an eye on tamping down inflation, the Fed looks primed to continue raising rates until it achieves that goal, even if it means bringing the country into a recession. That should push investors into safe havens like precious metals again despite the latest market rally, which Morgan Stanley sees as temporary.
“Counter-trend rally may continue, but make no mistake, we don’t believe this bear market is over, even if we avoid a recession,” said Morgan Stanley strategists.
As far as which metals to watch, gold was always going to be a prime mover, but silver and platinum are also metals to consider. That’s especially the case given their industrial usage.
“I’m closely following the price action of two metals that look remarkably cheap,” Dominic Frisby wrote in MoneyWeek. “They are silver and platinum. I mentioned them last week.”
“The case for platinum, the main use of which is in catalytic converters for diesel engines, is pretty simple,” Frisby added. “You would normally expect it to trade at a 25% premium to gold; that is the historical average. But demand has been shattered since the Volkswagen emissions scandal of 2015 and the subsequent move away from diesel engines.”
All the Metals in 1 ETF
Rather than hold various positions in precious metals, investors can consider one fund for multi-faceted exposure: the abrdn Physical Precious Metals Basket Shares ETF (GLTR). The fund seeks to reflect the performance of the prices of physical gold, silver, platinum and palladium, in the proportion held by the Trust, less the Trust’s expenses.
“When I say buying silver or platinum, I don’t necessarily mean going down to the bullion shop and buying bars, nice though they are,” Frisby said. “I mean physical metal stored in vaults, ETFs (exchange-traded funds), mining companies, even options or spread betting the price (though these last two are only for the experienced and highly risk-aware, so if you don’t already know how to do it, I suggest you don’t).”
Key Features of GLTR:
- Physically-backed: Cost-effective and convenient access to a basket of physical precious metals.
- Transparency: The metals are held in allocated bars, and a bar list is posted daily on abrdn.com/usa/etf.
- Pricing: All metals are priced off the LBMA’s and LPPM’s specifications for Good Delivery, which is an
internationally recognized and transparent benchmark for pricing physical precious metals.
- Vault location: Metals are held in London, United Kingdom at a secured vault of J.P. Morgan Chase Bank, N.A.
- Vault inspection: Inspectorate International, a leading physical commodity auditor, inspects the vault twice per year (including once at random).
For more news, information, and strategy, visit the Commodities Channel.
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