1 ETF Set To Way Outperform?

A joke went viral recently when a comedian wrote a skit about two people arguing over the merits of the US Dollar and Bitcoin respectively. Had you invested $10,000 in Bitcoin in 2010, you would have almost $100 million now, according to the skit writer. If you left your $10,000 in fiat currency you would have about $8,500. The skit concluded that’s precisely why you don’t want to own Bitcoin….because it’s too volatile!

Fast forward 14 years and the same arguments against fiat currency can be made. It’s a poor store of wealth, though more stable than other asset classes. As we look to the future, the concerns grow over storing wealth in a savings account. From forgiving student loans to pandemic stimulus checks, government has been on a clear path to stimulate the economy and the consequence has been inflation.

Then there’s the geographical turmoil that appears to be escalating. Recent news reported that the Biden administration had authorized weaponry supplied by the US to be used within US borders. Secretary of State Blinken followed with comments that a clear path to Ukraine joining NATO exists. All of these breadcrumbs point to one asset class having the potential to rise substantially over time, so which is it?

Key Points

• Bitcoin’s extreme volatility contrasts with the declining value of fiat currency, which, despite being more stable has failed to preserve wealth.
• Government measures like student loan forgiveness and stimulus checks have spurred inflation, making traditional savings less reliable for maintaining wealth.
• Rising geopolitical tensions may harm Big Tech and major indices, while potentially boosting the value of metals, which have lagged behind the S&P 500.

Will Metal Outperform?

A quick look at how metals have performed relative to the S&P 500 reveals relative underperformance in recent years. That’s understandable in a world where AI has won the favor of investors and Big Tech has grown from strength to strength.

But some analysts see earnings growth slowing in the coming quarters, and most technology titans are priced to perfection. What happens if any one of the geopolitical matches around the world are lit, whether a direct conflict between Russia and the US, an invasion of Taiwan by China, a formal approval of Ukraine into NATO, or an escalating Middle East conflict?

At that time, the odds are Big Tech will suffer and drag down the major market indices while metals break out, at least according to this chart below.

Credit: BrandonBeylo

Is It Time to Buy Metals?

Among technical traders, the right time to buy into the idea that metals will breakout is when a breakout actually occurs.

The XME offers an attractive way to play a general breakout in metals. For now, XME appears to be bumping up to resistance and dipping down to support.

When it finally eclipses that upper resistance line, XME will appear to be a compelling buy.

For those who like to dollar cost average, though, the opportunity exists now to steadily accumulate a position if you believe political instability is likely to escalate in the coming years.