Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500

Gold is in a major bull market and may surge to more than $1,500 an ounce as low interest rates buoy demand and the U.S. presidential election looms, according to DBS Group Holdings Ltd., which foresaw this year’s rally and is now advising investors to buy any declines.

DYI Comments:  Totally agree - purchase the tips.  Gold is in a bull market with a stock market that is insanely overvalued.  The Dow/Gold Ratio will once again be on its multi year march to secular over valued at a possible 1 to 1 ratio.

  
7-20-16 Dow Gold Ratio 14 to 1 rounded.

The mining companies have made a nice pop in price since its bottom of around 70% to 110% waiting for a correction is the sensible thing to do.  However, gold and the mining companies in the long term secular picture is no longer "shooting fish in a barrel" as it was in 1998 to 2002 period of time(see chart above 48 to 1). Since that time - year 2000 - gold even despite coming off this steep correction has been on a tear.

 Secular Market Top - Since January 2000

From High to Low

+355.2% Gold

+152.9% Utilities

+151.4% Transports

+  88.8% Oil
+  64.4% 30 year Treasury bond

+  61.7% Swiss Franc's

+  56.0%  Dow
+  42.9% S&P 500

+  19.0% Nasdaq

This is why our model portfolio asset allocation to gold is so small as the "easy pickings" days are behind us.

  Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 7/1/16

Active Allocation Bands (excluding cash) 0% to 60%

87% - Cash -Short Term Bond Index - VBIRX

13% -Gold- Precious Metals & Mining - VGPMX

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

Is it possible before valuations improve my model portfolio goes completely into cash?  It's possible due to massive world wide central meddling in all markets.  This insane QE, sub atomic low or negative interest rates and out right buying of securities by central banks will go down in economic history as delusional.  Similar to the tulip bulb mania or the South Sea stock bubble.  On a secular basis cash - MMF or short term bonds - that pays you almost nothing are the most undervalued.  Gold currently on a sentiment basis is neither over or under valued but currently at its mean.

  

Market Sentiment

Smart Money buys aggressively!
Capitulation
Despondency
Max-Pessimism *Market Bottoms*Short Term Bonds
Depression MMF
Hope
Relief *Market returns to Mean* Gold

Smart Money buys the Dips!
Optimism
Media Attention
Enthusiasm

Smart Money - Sells the Rallies!
Thrill
Greed
Delusional
Max-Optimism *Market Tops* Long Term Bonds
Denial of Problem U.S. Stocks
Anxiety
Fear
Desperation

Smart Money Buys Aggressively!
Capitulation

So hold onto your hats and cash better values are ahead.

DYI