Article Category: Gold

From Bullish to Neutral, Thanks Quants

Dow Theory considers daily action in the stock market to be nothing more than noise, and that presupposition may be gaining in importance. I've been hanging on to the chart below, waiting for an opportune time to present it, and I think that time is now.

This chart, using data from Aite Group and Goldman Sachs, claims to show the share of trading that is done by algorithms. As you can see, the majority of equity market trades (around 65%) are executed by computers based on preset logic.


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Posted in: Dow Theory Gold Psychology Recessions

How Long Until the Next Recession?

Successfully predict the start of the next recession, plus or minus a few months, and you stand to make a lot of money. Not only can you reposition your portfolio towards bonds and cash - typically the best place to be during periods of economic malaise - you can also sell your stocks at or near the market's peak.

In fact, if your primary objective is to invest in sync with the Primary Trend of the market, then predicting the onset of a recession is your most important task. This is because the primary trend of the market typically follows the economic business cycle.


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Posted in: Federal Reserve Gold Interest Rates Primary Trend Recessions

Taking a Step Back

In the stock market, we're always making bets. Sure, you can call it "investing" to make yourself feel better, but at the end of day when most investors commit capital to the market, they're doing so with less awareness of the odds than in a typical casino game.

What's interesting, however, is that even those who don't invest in the stock market are making bets. Their bet is simply that the stock market will produce returns below that of available alternatives, whether those be cash, bonds, gold or anything else.


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Posted in: Bonds Gold

What Correction?

Wow, that was fast. While most traders were waiting for the classic double-bottom to occur in the wake of the Feb 8 correction low, the market had other ideas. Now, after more than two weeks of higher prices, major averages have recovered a good chunk of the gains they lost during "hell week."

The tech-heavy Nasdaq has done the best to recover from its knockout. As you can see below, the Nasdaq is only about a hundred points below where it peaked in late January.


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Posted in: Corrections Economy Gold Momentum Primary Trend Volatility

How to Think About Hedging Against Inflation

One of the topics that seems to be on the minds of investors right now is the idea of rising inflation. The recent global economic upturn, combined with a stimulative tax package, is causing some to believe that we're about to see the whites of inflation's eyes.

If that truly is the case, how should we handle this as investors? Should we move our portfolios into asset classes that have been deemed good "hedges" against inflation?


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Posted in: Federal Reserve Gold Inflation Interest Rates Volatility

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