Stocks Cautious on China Growth, Financials and Industrials Lead, Gold in Favor

Stocks Cautious on China Growth, Financials and Industrials Lead, Gold in Favor

$DIA, $SPY, $QQQ, $RUTX, $GLD, $VXX

Trade tensions should not disturb your portfolio’s peace of mind.

To help prevent your portfolio from becoming “trade war collateral,” consider diversifying your assets to minimize exposure.

Assets like physical Gold and Silver are historically known to perform well during turmoil in such dust ups.

Recently, Jim Cramer urged investors frightened by the seemingly endless stock-market volatility to seek some financial solace by buying Gold.

“We can’t assume it will be a smooth sail for the rest of 2019, so what does that mean for you as an investor if you need insurance for your portfolio? The best way to protect yourself from economic chaos is by owning some gold now, I have been saying this for years,” Mr. Cramer recently said on TV.

“When the sells got extreme in December, Gold prices rose by 5%, and it is continuing to edge higher historically, when other asset class become volatile, investors love crowding into Gold,” he said.

“Every time something big happened, that made investors nervous, like the Fed’s decision about their bond buying practice, Gold spiked,” he said.

“If you are looking for an insurance policy against volatility, Gold is a great way to go. I like the stock market here, as you know, now that the Fed has decided to be more patient, but the whole point of diversification is to be prepared if something goes wrong, not right.”

Mr. Cramer is not alone in touting the precious metal as an investor haven.

Goldman Sachs analysts led by Jeffrey Currie raised their price forecast for Gold, predicting that over 12 months the metal will climb to $1,425 an ounce, a mark not seen in more than 5 years, we reported here.

Bullion has benefited as rising geopolitical tensions drive central bank purchases, while fears of a recession helped boost demand from investors seeking “defensive assets,” they said.

Bullion-backed ETF’s (exchange-traded funds) are expanding, with holdings rising to the highest since May.

February Gold rose $1.80, or about 0.1%, to settle at $1,29165 oz, after closing Friday with a 0.3% weekly advance

Speculative interest in Gold signals investors are not only closing Bearish bets but are also adding to Bullish positions.

Gold is also getting a boost from mounting speculation the Fed will pause in raising borrowing costs, boosting the appeal of non-interest-bearing metal.

“We expect the safe-haven bid, and to a lesser extent, Gold’s inflation hedge properties, to remain Key drivers of the metal’s price in 2019, complemented by a resurgence of physical demand,’’ Cantor Fitz analysts said in its recent report.

Gold and silver are ‘‘looking good in 2019,’’ underlining a potentially positive indicators that ‘‘should drive a Bullish case” for both metals “and as a result, the related equities as well.’’

It is true that the lingering trade dispute uncertainty and fears of stalled global economic growth have enlivened expectations for higher prices among Gold Bulls, who believe that purchases of safe-haven commodities among investors will accelerate as riskier assets, including stocks, exhibit more volatility in Y 2019.

The climb in geopolitical concerns are behind what is now developing to be a new Bull run in Gold.

And we look for higher prices and believe a breakout above $1300 is setting up in here. Further, a balance investment portfolio should contain as much a 10% in Gold.

Monday, the major US stock market indexes finished at: DJIA -86.11 at 23909.84, NAS Comp -65.56 at 6905.93, S&P 50 -13.65 at 2582.57

Volume: Trade on the NYSE came in at 892-M/shares exchanged.

  • Russell 2000 +6.3% YTD
  • NAS Comp +4.1% YTD
  • S&P 500 +3.0% YTD
  • DJIA +2.5% YTD

HeffX-LTN’s overall technical analysis for the major US stock market indexes is Neutral.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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