As more Federal Reserve rate hike mulling continues through 2022, the push-pull dynamic allows traders to capitalize on the moves with exchange-traded products linked to precious metals—particularly gold and silver.
Fresh off a 50-basis point hike, the Fed seems to be erring on the side of hawkishness, but talks of a recession amid inverting yield curves should push more investors to gold in a safe haven scramble. Thus far, it seems the sentiment through the rest of 2022 is that rate hikes will continue.
“I don’t think a whole lot changed in overall Fed policy from yesterday’s meeting, but it just gave gold and silver traders an excuse to rally the market after the recent strong selling pressure,” Kitco senior analyst Jim Wycoff told Reuters.
“The whole scenario in Europe with its energy supplies being constrained having banned some energy imports from Russia, that’s leading to instability in the European marketplace, that’s prompting safe haven demand for gold, prompting higher inflation in the eurozone,” Wycoff added.
2 ETNs to Play the Moves
A pair of exchange-traded notes (ETNs) can allow investors to play the bullishness in precious metals. For gold, investors can look at the Credit Suisse X-Links Gold Shares Covered Call ETN (GLDI).
The fund’s index measures the return of a covered call strategy on the shares of the SPDR® Gold Trust (the GLD Shares) by reflecting changes in the price of the GLD Shares and the notional option premiums received from the sale of monthly call options on the GLD Shares less national trading costs incurred in connection with the covered call strategy.
For silver, investors can look at the Credit Suisse X-Links Silver Shares Covered Call ETN (SLVO). The ETN measures the return of a covered call strategy on the shares of the iShares® Silver Trust (the SLV Shares) by reflecting changes in the price of the SLV Shares and the notional option premiums received from the national sale of monthly call options on the SLV Shares less notional transaction costs incurred in connection with the covered call strategy.
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