Three Alternative Investments to Buy as Ways to Diversify

Three alternative investments to buy as ways to diversify feature gold, silver and cryptocurrency.

The three alternative investments to buy as ways to diversify offer a different path to profits as the U.S. market now seems to be aided heavily by the Fed’s interest rate cuts. A 1/4% interest rate cut gained Fed approval on Sept. 17, and another two or three reductions could be taken by year’s end, according to prognosticators.

The latest reduction brings the Federal Funds Rates’s target range to 4-4.25%. The Fed indicated in its Summary of Economic Projections that it may continue cutting rates in 2026 and 2027, but at a slow pace, with projections indicating a 3.4% rate by the end of 2026 and 3.1% by year-end 2027.

This easing is to combat a slowing in the labor market and may end up increasing inflation, cautioned Mark Skousen, who heads the TNT Trader advisory service and the Forecasts & Strategies investment newsletter.

“The markets — both stocks and gold — reacted favorably and we sent out two Special Alerts last week to sell some of our options for big gains,” Skousen wrote to his TNT Trader subscribers in his Sept. 23 report. “We are currently profitable in all five of our short-term recommendations.”

Mark Skousen, head of TNT Trader and Forecasts & Strategies, meets with Paul Dykewicz.

Three Alternative Investments to Buy as Ways to Diversify: GOLD

In another Skousen advisory service, Five Star Trader, its subscribers just closed out nearly a 50% profit through a recommendation in IAMGOLD (NYSE: IAG). The stock recommendation produced a 49% gain to subscribers.

Whenever a stock or fund stops out of a Skousen trading service like Five Star Trader or TNT Trader, the subscribers are advised to sell related options as soon as possible. Those who did so with the last portion of IAG call options achieved a 200% gain, averaging a return of 83% on all of the IAG call option trades.

However, the trend remains a friend for rising gold prices. IAMGOLD still could be of interest to investors who want exposure to gold without buying a position that could be regarded as overvalued.

Three Alternative Investments to Buy as Ways to Diversify: Silver

Silver is another alternative investment. I personally own Hecla Mining (NYSE: HL), which specializes in finding and mining silver. It is up nearly 27% since Skousen recommended it in his Low-priced Stock Trader adversary service several weeks ago. The recommendation’s call options are up nearly 200%.

“Three weeks ago, we added a position in Hecla Mining (NYSE: HL), a top silver miner. It’s up over 27%, and the call options are up nearly 200%,” wrote Skousen.

With Hecla climbing, Skousen raised his stop to try to ensure his subscribers will end up with a gain, no matter if the stock keeps soaring or pulls back.

“We already sold half of our December call options last week and doubled our money,” Skousen wrote to his subscribes this week. “We have plenty of time left to make additional profits.”

Chart courtesy of www.stockcharts.com.

Three Alternative Investments to Buy as Ways to Diversify: Bitcoin

Among the investors seeking to profit from Bitcoin and other cryptocurrencies alternative investments are clients of Michelle Connell, who heads Dallas-based Portia Capital Management. Connell advised me that an allocation to cryptocurrency of up to 5% makes sense for some of her Portia Capital Management clients.

However, risk management of these new assets is needed, Connell counseled. That explains her cautious approach to investing in cryptocurrencies, causing her to weigh in with cryptocurrency ETFs that have cover calls and other forms of downside protection, while still providing upside participation and income.

One risk-averse way to invest in Bitcoin is through First Trust’s Vest Bitcoin Strategy ETF (BFJL), said Connell, who spoke to me on the phone while she was driving to Morgan City, Louisiana, with a videographer. The fund seems like an interesting way to participate in the upside of Bitcoin, but “miss” some of its downside, she added.

Chart courtesy of morningstar.com.

“In the past three years, Bitcoin has made almost 150%,” Connell told me.

In the last year, the cryptocurrency is up 77.20%. However, Bitcoin’s climb has slowed down so far this year as it has gained about 20.11%, Connell continued.

Michelle Connell heads Portia Capital Management.

Three Alternative Investments to Buy as Ways to Diversify: Bullish on Bitcoin

When those results are combined Bitcoin’s maximum “draw down” over the past three years has been almost 30%, even though the cryptocurrency rose during that time overall. Many people get nervous and cannot hold onto something when a loss occurs, she added.

“As a Bitcoin investor, if you can minimize your downside to 15% and still make 30% on the upside, wouldn’t you be interested? That’s what I’m asking clients now.”

If the investment were to “behave similar” to its past performance, an investor would be capturing most of the cryptocurrency’s recent upside and minimizing your losses by quite a bit. Connell counseled.

Chart courtesy of finance.yahoo.com.

Three Alternative Investments to Buy as Ways to Diversify: Fund Limits Volatility

First Trust’s BFJL is designed to give investors a “12-month targeted outcome” with the downside maximized at 15% and the upside topping out at 30% for that time period, Connell explained. The ETF’s expense ratio of .90%, “not too bad” for this level of participation in a cryptocurrency, she added.

“We know that Bitcoin has been a highly profitable investment over the past several years, but it also is highly volatile,” Connell said. “Why not truncate some of the risk?”

Connell’s interest in putting some of her clients into cryptocurrency investments is not what one may expect of a money manager who also advises leaders of a municipality to fund city services. Morgan City, Louisiana, 85 miles from New Orleans, relies on Connell to help manage the community’s largest foundation that funds the schools, the fire department and the police department, as well as the construction of a new youth center and other services.

Despite her risk-averse philosophy in protecting yet growing a municipality’s resources to fund so many of its critical services, Connell expressed the value of diversification and the opportunity for upside by putting some money into cryptocurrencies.

Three Alternative Investments to Buy as Ways to Diversify: Geopolitical Risk Rises

President Trump commented positively about Ukraine potentially regaining some of the territory that it has lost from Russia’s 3 1/2-year invasion of its neighboring nation.  Trump met with Ukraine’s President Volodymyr Zelensky on the sidelines of the 80th session of the United Nations General Assembly in New York. Such a result would not come without fierce opposition from war instigator Russia.

In a social media post on Truth Social, Trump wrote, “After getting to know and fully understand the Ukraine/Russia Military and Economic situation and, after seeing the Economic trouble it is causing Russia, I think Ukraine, with the support of the European Union, is in a position to fight and WIN all of Ukraine back in its original form.”

The upbeat comments were a marked change from his prior position of trying to urge Ukraine to give up land for peace. However, Russia’s President Vladimir Putin has been holding out for gaining even more of Ukraine’s sovereign territory.

President Trump’s repeated efforts to find a peaceful end of the war have proven unsuccessful thus far. With Europe and NATO expressing a willingness to back Ukraine to the extent that is needed, Trump may be hopeful Putin and his fellow leaders in Russia could be swayed to take a path that may provide economic relief to end a war that keeps causing deaths, injuries and destruction.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.