Where to Hide if We See a Repeat of December 2018

December hasn’t been a kind month.

A year ago, the Dow Jones Industrial Average (DJIA) plummeted from a high of 25,980 to a low of 22,396 thanks to the trade war.  Nowadays, there’s fear we may see it happen all over again, as the Dow sinks another 600 points in the first two days of the month.

Again, all thanks to trade war intensification.

President Trump also just referred to today’s losses as “peanuts,” and said it won’t force him to make a bad China trade deal.  Wilbur Ross also just said Trump is “serious” when he said trade talks could last beyond the 2020 election, as reported by MarketWatch. Worse, Ross said Trump would impose another round of tariffs on Chinese goods on Dec. 15 unless there was “some real reason to postpone them.”

Some of the safest places to invest in times of absolute chaos are gold trades, such as the SPDR Gold Trust, silver, and even bond investments.  Another hot spot is volatility itself. In fact, when we begin to see higher highs in the Volatility Index (VIX), we also see higher highs in VIX-based opportunities.

ProShares Ultra VIX Short-Term Futures ETF (UVXY)

As volatility ticks higher with the trade war, ETFs such as the UVXY could run even higher.  The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index. 

VelocityShares Daily 2x VIX Short-Term ETN (TVIX)

The TVIX is another great way to trade elevated volatility.  This ETF  tracks an index of futures contracts on the S&P 500VIX Short-Term Futures Index.

iPath S&P 500 VIX Short-Term Futures (VXX)

As volatility returns to the markets, one of the best ways to profit from volatility is with the VXX ETN, which provides exposure to the S&P 500 VIX Short-Term Futures Index Total Return.  As volatility shoots higher, so does the VXX.