An ETF to play gold, silver, copper and everything in between
Precious metals are leading big gains for commodities this year and some think the runway for both hard and soft assets could be the place to be until inflation cools off.
The S&P 500 and Nasdaq Composite may be smashing records, but commodities are doing some celebrating of their own.
"People are concerned about inflation, whether it's financial advisors or individual investors. Certainly, based on a lot of the economic data in the U.S., and globally, that's come out this year. Inflation remains persistent, people feel it, whether they're at the gas pump or in the grocery store," Ed Egilinsky, managing director at Direxion, told FOX Business.
Cheese has gained 19%, milk 32% and cocoa a whopping 195%, while U.S. crude is up 14%, silver 23%, copper 17.5% and gold 13%.
"I think that translates for people who say, how do I participate in something where I see it myself day to day? How can I potentially benefit within an investment? I think commodities is a way that people look to express that, in different ways," he added.
The firm’s Direxion Auspice Broad Commodity Strategy ETF, ticker COM, provides exposure to hard and soft commodities that can be "long or flat", which can pivot to sharp swings not uncommon in commodity trading, according to the fund’s description.
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"It consists of 12 commodities; in the energy space, the metals, the grains and softs. But what differentiates it? It's not a static, long, lonely, broad commodity solution," he detailed. "What's unique about it is that if a commodity is showing a favorable price trend that commodity will be long. However, for an individual commodity showing a downward price trend, the commodity will be in cash. So, we can be long anywhere from 0 to 12 commodities and everywhere in between," he explained.
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"Right now, we are long, six commodities, gold, silver and copper, along with crude oil, gasoline and wheat," he added.
With inflation sticky, a Federal Reserve that has penciled in at least one rate cut this year and geopolitical uncertainty, the commodities trade may have long legs, especially gold.
The World Gold Council, in its Central Bank Gold Reserves Survey released this week, noted "29% of central banks respondents intend to increase their gold reserves in the next twelve months, the highest level we have observed since we began this survey in 2018," the data showed.