What to Do? Nothing. Hold cash.

Stocks are way overvalued and over bought. Yes, the breadth has been good in the latest rally but I see the equities potentially failing, right here, right now. Earnings fell for the fourth quarter in a row and the economy is clearly slowing down. Could the major indices move up another percent or two and set new all-time highs? Sure. But I see less than 5% upside and at least 50% downside. That’s not a game I want to play.

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Gold: The Big Picture

Gold is the perfect anti-asset…anti-stocks, anti-bonds and anti-financial assets generally. When financial assets are strong, gold is generally weak and vice versa. When financial assets are highly valued, the smart contrarian play is to sell financial assets and buy gold. When gold is relatively highly-valued, the smart play is to sell gold and go long stocks. The correct measure is the relative value of these assets.

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