Author: Patrick Clark
Covestor model: Market Neutral Growth
Disclosure: Long DBP
Over the past month, the debt crisis in Europe has overshadowed all other factors in the financial markets. In a somewhat ironic twist, investors have turned to the exact asset class they shunned just before – U.S debt. The dollar has been the strongest of the currencies I monitor and demand for U.S. bonds are going through the roof as investors look for shelter from the European debt crisis.
Other than the U.S. dollar and U.S. debt, however, most other asset classes sunk over the past month. Even precious metals, which have been investors’ choice for quality over the past years and are in a long term uptrend, have taken a hit recently.
I think this dip in precious metals represents a rare opportunity to enter at levels that are not extremely overbought. I opened a position in PowerShares DB Precious Metals Fund (NYSE: DBP) on 9/26 to take advantage of this opportunity. If I am wrong and precious metals are entering a new downtrend, I plan to cut my losses at about 5%.
