Safe Haven, is it Gold?

  The biggest head wind to gold right now is that stock prices have been under some pressure, the economy of the world is under pressure, and as stocks prices come under pressure, it’s not a matter of what you want to sell, but what you can sell…And gold is one of the things people are selling. We also have inflationary pressures out there..look at copper prices, crude oil prices, and that’s putting downward pressure on gold.

  Gold is considered to be a safe haven. Safe havens don’t one and two and 5 percent. Gold moves one and two and five percent. So the fact that people consider gold to be a safe-haven is wrong. Gold is the ‘Armageddon Trade’ in case the whole thing falls apart and if all else goes wrong.

  Parking money in gold is foolishness. The safer things are; buying Canadian Treasury Securities (Canadian T-bills), Australian Treasury Securities (Australian T-bills), or buying U.S Treasury Securities (U.S. T-bills) that have not moved much. ‘Safe’ means ‘Safe’. Safe doesn’t mean something that moves up fifty percent and down thirty percent…That’s hardly safe. Gold is not a safe-haven, Gold is something you trade.

  When it’s a bull market you buy gold, and in a bear market you sell it, and right now we’re in a bear market since October of last year, and gold is being sold.

  For a ‘Safe Haven’ look at (and I keep repeating with good reason) quality stocks paying dividends…Verizon (VZ 41.09), AT&T ( T  33.38), Altria Group (MO 31.96) or (MHY 6.22) a high-yield fund.

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Stay Invested in U.S. Stocks to Profit

U.S. markets continue to defy the trend in April, historically the third best month on the year for stocks. The Dow just managed to end positive for April, eking out a small tiny gain just above 0.01%. This extended the Dow’s monthly win this week to seven. The Nasdaq turned it’s first negative month since December, and the S&P it’s first since November.

  Historically  May is the third worst month for the Dow and S&P. It’s time to be optimistic about the stock market. If you got out of the market, at these levels it’s time to get back into the market.

  Corporate profits continue to surprise to the upside, and half way through the earning

 season’s first quarter, seventy percent of the S&P companies have outperformed, beating expectations. I expect that trend to continue.

  Expectations have been very low, and looking back nine-months ago, the most recent beat is ahead, but well below the expectations of nine months ago. Don’t expect to see severe increases in those corporate earnings.

   Look for consistent single digit earnings type momentum. Margins are high, but if we learned anything over this earnings season, it’s that earnings can continue to remain elevated and consistent. There has also been top-line growth, which can be expected to continue.

  GDP is not growing the way it has in other recoveries, but it is growing, and margins will continue or improve. Labor costs here in the U.S. are down about thirty percent over the last five years. There is also room for capacity utilization two places pointing to elevated margins for some time.

   The balance sheet in American house holds is stronger than it has been five years ago, and arguably in the last twenty years. Consumer spending has picked up about four percent year-over-year, but that spending has dropped. Disposable income is up a bit, so U.S. consumers do have some capacity to continue spending. Debt service levels here in the U.S. for house holds are at their lowest levels in twenty years.

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