There’s one surefire way to know when a particular asset or industry is ready to take off.
And that’s when institutional investors create an exchange-traded fund (ETF) to track it.
Like a mutual fund or index fund, an ETF is a way for investors to buy a basket of stocks, bonds, commodities, etc. by purchasing a single stock.
With more than $3 trillion in assets under management, ETFs are one of the most popular investment vehicles on the market.
Hundreds of new ETFs are launched each year. From just one in 1993, the ETF market has grown to more than 1,400 today. On an average day, ETFs make up about 25% of equity trading volume.
One reason ETFs have grown so popular is that they offer investors a low-cost way to diversify.
For example, if commercial property is hot, investors can buy a real estate ETF, which carries a basket of real estate companies… rather than buy a single real estate stock.
By spreading the investment dollars over multiple companies instead of one, ETFs can reduce the risk that comes from owning an individual company’s stock.
But I’m not writing about ETFs to recommend one to you. I like them for another reason…
They can be powerful indicators… Showing when particular assets or industries are about to break out.
Take the SPDR Gold Shares (GLD) ETF. The World Gold Council created it in 2004 to promote investment in the precious metal. At the time, there was only one gold ETF in existence… but it was listed in Australia.
When GLD was launched in the U.S. on Nov. 18, 2004, the price of gold was $442 per ounce. Today, it’s $1,330 per ounce… due in part to the surge of large pools of investor funds that flowed into GLD.
GLD is now the world’s largest private owner of bullion, buying an average of $30 million in gold per day. And as you can see in the chart below, the fund’s holdings closely mirror the price of actual gold.
In the three days after GLD launched, the fund hit $1 billion in assets. It hit $10 billion in just over two years. Today, it’s pooled $40 billion investment dollars.
But here’s the key thing about the launch of GLD most people don’t realize… It attracted thousands of new investors to the market.
An estimated 750,000 to 1 million investors bought into GLD who otherwise wouldn’t, according to the fund’s managers… And between 60% and 80% of them had never bought gold before.
You see, when GLD launched, pent-up investor demand for the metal erupted.
By creating the first quick and easy way for investors to buy into gold, GLD radically expanded participation in the gold market.
And that’s why I’m so excited today. Because we’re about to see something similar happen in a brand-new sector of the market: the digital currency sphere.
As you may know, I’ve been bullish on cryptocurrencies for most of the year. I first told my readers about digital currencies in April 2016.
Since then, I’ve been pounding the table about them.
But I had no idea what would happen next…
In June, a team of venture capitalists filed a major proposal with the U.S. government.
They’re seeking to launch the first-ever ETF to offer exposure to digital currencies.
If approved, that pent-up demand will erupt and flood digital currencies with streams of new investor money. And with the new trading of these currencies on a daily basis, liquidity will explode.
Right now, there are hundreds of thousands of investors around the world waiting on the sidelines.
But they haven’t yet invested for one reason or another. (For instance, buying digital currencies is harder than investing in stocks; investors need to open up a digital wallet; they need a protected computer; they aren’t tech savvy enough, etc.)
With the new ETF, investing in digital currencies will become as simple as typing a ticker symbol into an online brokerage account.
Friends, we’re about to see the creation of an entirely new asset class. And most people are unaware of it.
Readers who have been following my recommendations since March are already up nearly 60% on our initial position… and this is just the beginning. Most of Wall Street hasn’t even woken up to digital currencies yet, but all that is about to change.
Now is the time to get in on the action…
I recommend holding a small portion of your assets in digital currencies.
Not only will they serve as a chaos hedge against negative interest rates and the War on Cash… But with the imminent launch of brand-new ETFs, we could see a great deal of capital gains, too.
Editor, The Palm Beach Letter
P.S. The launch of these new ETFs is going to spark a boom in digital currencies. But if you wait until then to invest, you’ll miss the boat.
The key to making a windfall off this surefire surge is to invest in cryptocurrencies before the government approval deadline. That’s where the big gains will be made. For one digital currency, it could be as much as 200% in the next 12 to 18 months… and that’s my most conservative estimate.
To learn more about how I’m advising investors to play this rare event, watch my latest presentation here.