Excellent Time to Re-Balance with Stocks &Junk Bonds Flying High and Gold Mining Companies at Bargain Prices!

Gold Tumbles Out of Favor as Equities, Dollar Spur Cuts to ETPs

Gold is out of favor. Investors cut holdings in bullion-backed exchange-traded products to the lowest since 2009 as surging stock markets in the U.S. and China hurt demand and prospects for rising U.S. interest rates boosted the dollar.  

World equities climbed in 2015 as U.S. stocks reached a record and the main gauge in China more than doubled in 12 months. The Federal Reserve has signaled it expects U.S. growth to pick up after a contraction in the first quarter and, while unlikely to raise interest rates this month, it’s left the door open to tightening later this year. Higher rates curb gold’s allure because it usually gives returns only through price gains. 

“The overall direction in the market is away from risk hedges like gold and toward yielding assets like equities,” Jens Pedersen, a senior analyst at Danske Bank A/S, said by phone from Copenhagen. “And with that as the overall direction of travel, we’re seeing investors rotate out of gold ETFs.”

DYI Comments:  When assets are "out of favor" isn't that the best time to buy?  A contrarian investor would say emphatically "YES!"  Our averaging formula does exactly that as well.  When prices are above average we have less of the asset, significantly above(over 100%) then none and when it is below hold more and significantly below to a maximum of 60%.

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION -  6/1/15

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

85% - Cash -Short Term Bond Index - VBIRX

15% -Gold- Precious Metals & Mining - VGPMX

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

 0% -Stocks- Total Stock Market Index - VTSAX
 0%-REIT's- REIT Index Fund - VGSLX

[See Disclaimer]

Gold as measured by the Dow/Gold Ratio is pricey but sentiment is back to its mean.  There is much further to go on the upside before this secular bull market is finished for gold.
THIS IS A GREAT TIME TO RE-BALANCE INTO GOLD MINING COMPANIES.

Market Sentiment

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

Smart Money buys the Dips!
Optimism
Media Attention
Enthusiasm

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

Smart Money Buys Aggressively!
Capitulation

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Fred's Intelligent Bear Site brought to you by Fred Filskov. Public, private, and commercial distribution of this material is permitted as long as a link to this site is attached.

DYI