Investors looking for a way to hedge their portfolio right now may look to buy some put options on their large positions or just bet against the overall market via going short an exchange traded fund (ETF) tracking the broader indices. Such a strategy often turns out poorly, and if stocks continued to be buoyed by accommodative fiscal and monetary policy, these bets could really hurt investors’ near-term returns.
One way investors could hedge their portfolios I think is much more productive long-term is to look at alternative asset classes like precious metals. In the precious metals space, I’ve long gone to gold miners as an attractive way to gain the maximum amount of leverage possible to rising gold prices over time.
I do think we’re in the midst of a bull market in gold and other precious metals, with headwinds to the U.S. dollar and economic growth likely to materialize. If you’re a gold bull as well, and want an effective long-term hedging strategy, buying an ETF like the VanEck Vectors Gold Miners ETF (TSX:GDX) is a great way to go.
This ETF tracks the broad gold miners index, and holds a range of large, mid and small cap companies in this space. There’s heavy exposure to gold, and also exposure to silver as well, two asset classes I think are poised well to continue to benefit from the aforementioned headwinds to the U.S. dollar.
Invest wisely, my friends
