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Gold Continues the New Uptrend

I just noticed today that the Gold ETF (GLD) is now at a new 8 month high. The Gold Miners ETF (GDX) is at a 12 month high. US Stocks are still hovering just above the half-way point between the all-time highs last August-September and the lows the day before Christmas. Bonds have recovered somewhat since the Fed started hinting they may stop raising interest rates for awhile. In fact, bonds have started a new uptrend.

Stock risk has dropped as volatility has dropped, so we have gradually been adding back to our stock positions. However, we are still very underweighted in stocks because they have not yet reestablished an intermediate uptrend. A quick glance at a chart over the last six months or so will show you why. Gold and bonds are still the only major asset classes in our portfolios in an uptrend.

Have a great week.

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$22 Trillion – From $21 Trillion Ten Months Ago

It boggles my mind how far in debt the US is. It is even more staggering to realize the downward spiral is accelerating. It doesn’t look like tax revenues will increase to reduce the deficit. I surely don’t see enough spending cuts to balance our national budget. Good grief … all the politicians talk about is “reducing the deficit”. That’s like you and me talking about spending $5000/month more than we make instead of $8000/month more than we make. We are still going further under water every month. No talk at all about actually having a positive cash flow as a country or paying everybody back.

Yikes.

Sooner or later there is likely to be a huge financial “reboot” for the US dollar. Probably sooner. I don’t know anyone who actually thinks we will pay our debts.

Manage your portfolio risk accordingly. Do not be a big bond holder.

Cheers.

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The Jury is Still Out on Stocks

It looked like the Fed’s Policy reversal last week might push stocks over the hump (the “half-way” mark of the huge drop in Q4 2018). Stocks even edged up above the 50% mark. However, the last couple of days have seen a pullback to the vicinity of that half-way point. So, the jury is still out.

There are no changes to our allocations this week. Gold continues a quiet uptrend.

Have a great weekend.

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Fed Boosts Everything, Especially Stocks!

Well the Fed announcement this afternoon has sparked a nice rally in stocks. To a lesser extent, bonds and gold are rallying.

What has traders excited is the Fed reversing its prior rhetoric about continuing rate hikes because the economy is so strong. Now, they are saying that they could raise or lower rates, depending on inflation and employment. President Trump has been loudly complaining about the Fed strategy for months and should be much happier with this announcement.

Let’s see if this boost is enough to push stocks above the “half-way” point where they have been hovering.

Cheers.

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Two Steps Forward, One Step Back for Stocks

Well, one hour before the markets close on Monday, US stocks have given back most of Friday’s gains. So, the jury is still out on which way the markets will break from this “half-way point” in the market rebound.

Fortunately, our positions in Gold and the miners continue to climb, perhaps because of the economic uncertainty that prompted the Fed to recently announce they may not be so quick to reverse all the quantitative easing performed at the behest of Mr. Bernanke and Ms. Yellen.

Time will tell.

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Happy Friday, January 25th

We are seeing a nice rally today in everything but bonds across our portfolios. Gold, silver and the miners are up from 1.3% to 3.7% today.

The S&P500 is up 0.9% at this writing, so the jury is still out on which way stocks will move (up or down) from this halfway point in the recovery since the day before Christmas. Volatility is beginning to subside. . . a good sign for stocks.

We invested 10% of our cash, now holding 40% cash in our diversified, non-speculative accounts.

Have a great weekend.

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Where do US stocks go from here?

We’ve had a really nice rally since the intermediate term bottom hit the day before Christmas 2018. Each time we’ve seen a morning drop in stocks, buyers have stepped in and almost always ended the day with overall gains. As of this writing on Tuesday, January 22, at 9:50 AM Central, the S&P500 index is down 1% and US Small Caps and the International Stocks are down more. We’ll see what happens.

The rally has regained about half of the big 20% drop from all-time highs last Fall, but our indicators do not show up-trends for any asset classes except gold. Accordingly, we are treating Gold as our least risky asset class … both in terms of weekly volatility and trend. Since our methodology is all about managing risk, the least risky asset class gets the highest percentage portfolio allocation.

We are at another potential turning point for US Stocks. If stocks continue rallying and enter an up-trend they will “earn” a higher allocation of our portfolios. The same goes for bonds. No changes for now.

Have a great week.

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Yay! A rally to end the year!

Well, Mr. Mnuchin announced last weekend that he was calling the big banks last week to ask for their help in restoring confidence in the markets. Monday was terrible because everyone was on vacation. But, Shazam! The day after Christmas, we saw the biggest one day point gain in history!

Can you say “Plunge Protection Team”? The PPT is an old urban legend in finance that there is a secret group of financiers that, upon request, will step into the financial markets and act to stop a crash.

However, we see that this “secret” group really does exist! The day after markets officially enter bear market territory, they go up 5% in one day! I’m sure many breathed a sigh of relief.

There’s only one problem, though. If the selling continues, how many times will this group (if it exists) continue to step in and prop up the markets? Hmmm.

No actions are necessary in our portfolios. Gold and the gold miners continue their uptrend. We continue to hold a lot of cash.

Cheers, and Happy New Year!

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Friday Before Christmas Raises Questions

I’m not “into” politics, but I was disheartened by the resignation of our Secretary of Defense. The open acknowledgement of fundamental differences about US foreign policy creates great uncertainty around the world, in my view. That may very well benefit only those who wish our great nation ill.

The financial markets do not “like” uncertainty. Business leaders around the world are less prone to make big investments in the future when the political and regulatory environment seem unstable. No-one likes the idea that policies, tax rates, regulations or interest rates could take unexpected turns after they make a big bet on the future. So they don’t.

People are less likely to buy goods and services when they are uncertain about their jobs and future prospects. This uncertainty increases when big auto companies downsize and stop making certain products. This contraction in spending, this reduction in optimism, have self-reinforcing effects.

We seem to be at a turning point for our nation and for the world. This may just be another momentary blip in the markets like January of 2018 was. But it may be more.

Since we don’t predict the future in our methodology, we look at the behavior of different asset classes over recent months and respond accordingly. Gold has started an uptrend after a seven year bear market. All other major asset classes are trending down. It is time to be cautious.

Have a blessed Christmas and Happy New Year.

Dale

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Not Such a Good Week

As of this writing on Friday afternoon, the S&P-500 is down about 2% today, to wrap up a pretty bad week for stocks. Thankfully, gold, US Treasuries and the miners are doing well, offsetting our stock allocations.

After last week’s announcements about the Trade Truce, many people seemed to be jumping back in to stocks. Then came Tuesday’s big drop, followed by the market holiday, then Thursday’s big morning scare followed by a rally to close Thursday almost unchanged.

Lot’s of volatility. Volatility equals danger for your portfolio, in my view. So there is no reason for us to change our allocations at this time. We’ll keep holding lots of cash.

Have a great weekend!