ETF News Update: Are Precious Metals The New (old) Currencies?

Any day now, the American Dollar might suffer a potentially fatal blow at the hands of the U.S. government and its inability to resolve the debt ceiling/deficit reduction debate.
Regardless of what happens on Capitol Hill or if the August 2nd deadline is missed, credit rating agencies will still likely downgrade the US credit rating, which could spell disaster for the US economy and for the U.S. dollar. Side effects include, but are not limited to, a collapsing dollar, rising interest rates and an attack of the bond vigilantes who could seek revenge on the Federal Government and dump their holdings of U.S. Treasury bonds. For decades, the US dollar has been the safe haven currency worldwide, and, in recent times, the least ugly of the ugly. If the least ugly of the ugly suddenly were to become the ugliest, where can investors turn to seek safe haven and profits?

The answer: precious metals

Precious metals include gold, silver, copper and a recent addition, platinum. The debt ceiling debacle will likely spur new interest in precious metals, even as gold seems to set new daily records, since precious metals have been the safe haven for investors and civilizations for centuries. With a potential debacle just ahead, precious metals ETFs should be carefully considered as a valuable addition to one’s portfolio.

The first precious metal ETF that will likely be the “safe haven” for investors worldwide is the SPDR Gold Trust Shares (GLD) ETF. It’s the second largest ETF by market cap and has been wildly popular with retail and institutional investors, alike.  (GLD) has been climbing for week as investors consider the potential demise of the American economy and any sort of post-apocalyptic scenario.

The 2nd precious metal ETF that will also likely climb could be the iShares Silver Trust (SLV) ETF. Historically, silver has been considered the “poor man’s gold” and, while not as rocket-like in recent weeks, could still be expected to show significant potential if the global and U.S. economy fracture.

The 3rd metal ETF, oftentimes called “red gold” that could be considered is the iPath Dow Jones-UBS Copper Sub Index Total Return ETN (JJC). Copper has many industrial uses, and is widely known as “Dr. Copper,” for its predictive ability regarding future economic developments.

And finally, a precious metal not on most peoples’ radars until recent days, is platinum which could also offer another “safe haven” if things continue to get ugly and an ETF to consider here is ETFS Physical Platinum Shares (PPLT).

When one looks at the debacle on Capitol Hill, one can only worry and wonder about the future of the U.S. economy and the paper dollars in our wallets come Wednesday, August 3rd. But, as always, ETFs and precious metals ETFs, in particular, could be great places to go in what might turn out to be a brave, new “dollar-less” world.

Click here for a Special Report to Wall Street Sector Selector

Disclosure: Wall Street Sector Selector actively trades a wide range of ETFs and positions can change at any time.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.