Positioning Your Portfolio for a U.S. Debt Downgrade [Podcast]

by: Gary Gordon

A friend of mine just tweeted, “After watching news on the debt debate, I think I miss the Casey Anthony trial.” At least we can still laugh about some of this stuff, right?

On the other hand, investors may not be able to banish the past week’s political theater, regardless of when or how the U.S. government reaches an agreement. In fact, the investing implications may last for months, if not years.

Consider the price of gold at $1,630 per ounce. Will central banks around the world be less interested in the yellow metal, believing it to be overvalued in the age of bailouts and non-existent debt ceilings? Try to convince investors that SPDR GOLD (NYSEARCA:GLD) isn’t a “steal” if the precious commodity’s spot price drops to $1,500.

And just when you thought the export-dependent Japanese economy might rise from beneath its economic malaise, the yen hits a record. The only thing that rises in Japan when its currency hits all-time highs against the greenback is the exchange-traded fund, CurrencyShares Japanese Yen (NYSEARCA:FXY).

How else will some investors position their portfolios? Get ready for renewed interest in Short Treasury ETFs again. ProShares Short 7-10 Treasuries (NYSEARCA:TBX) and ProShares Short 20+ Year Treasury (NYSEARCA:TBF) should see heavy volume. Moreover, stock investors may feel compelled to head for mining heavyweights like Market Vectors Gold Miners (NYSEARCA:GDX) or SPDRS Metal and Mining (NYSEARCA:XME).

We may be nearing the endgame for the congressional chess match. Yet the possibility of a U.S. debt downgrade as well as the possibility of slower economic growth is just getting underway. Listen to this week’s ETF Expert podcast to learn more.

Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.