If Chaos In Egypt Spreads, Buy These Stocks
Protecting your assets from exogenous events should be a primary concern for all investors. We invest to make money, but even before that our No. 1 objective should be to avoid losing money. If the chaos in Egypt spreads, the effects on equities, currencies and commodities could be profound, and your objective should be on protecting your capital.
Here are a few stocks and sectors that are generally regarded a safe havens during times of political instability. Use them as a jumping off point for further research before altering your positions. Order in Egypt could be restored today, or it could escalate and spillover into surrounding countries:
SPDR Gold Trust (NYSE: GLD). Backed by gold bullion, the SPDR Gold Trust ETF is generally regarding as the safest alternative to actually buying and storing bullion. Gold and silver are generally considered the ultimate safe haven during periods of global instability. iShares Silver Trust (NYSE: SLV) is backed by silver bullion.
United States Oil Fund LP (NYSE: USO). If the unrest in Egypt spreads to neighboring countries in the Middle East or shuts down the Suez Canal, be prepared for an oil shock. Between the Canal and Egyptian oil pipelines, roughly 2 percent of global oil production passes through Egypt every day, according to the Wall Street Journal. If the Suez Canal were closed, oil shipments to the U.S. would be delayed by at least 10 days. They'd also cost substantially more.
PowerShares DB US Dollar Index Bullish (NYSE: UUP). Despite increasing fears of inflation in the U.S., the U.S. dollar is still the world's reserve currency. When investors are uncertain, they typically sell off investments and sit on the sidelines in cash. If they do that, chances are they're going to be holding greenbacks.
iPath Dow Jones-UBS Cotton Subindex Total Return ETN (NYSE: BAL). Egypt is a major cotton exporter and cotton prices are already strained with global prices sitting at 150-year highs. The iPath Cotton ETN invests in cotton futures contracts.
United States Natural Gas Fund, LP (NYSE: UNG). Egypt is a major natural gas supplier for the U.S. and Asia. Reduced supplies, particularly during the winter months, could push up natural gas prices quickly.
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