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business newsThe Big Money Is Now Headed for These 3 Safe Havens (Hint: Not Gold)
Utility stocks, the US dollar, and Treasury bonds are where the action is, but things could shift with the dollar looking toppy.
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It has been a month since I covered the US dollar index in detail; back on August 31, I pointed to a potentially large shift (see Dollar On the Verge of a Relief Rally). The charts were pointing to a sizable rally which would likely send stocks and all commodities crashing lower. Since then we have seen just that, and the so-called safe havens (gold, silver, oil) have dropped, taking most investment and retirement accounts down with them. I did talk about these so-called safe havens a couple weeks back (see How to Profit After Yesterday's Fed News Sent Commodities Reeling).
My Cole’s Note Summary: I do not consider any investment vehicle a safe haven if it can drop 15% in value within a day or two. And I would never put a large position of my account, especially a retirement account, into these investments if I were over 50.
So where are the big, smart, and conservative traders putting their money to work?
Let’s dig down and take a quick look at the charts ...
20 Year Bond -- Daily Chart:
US Dollar -- Daily Chart:
Utility Sector (Dividend Paying Stocks) -- Daily Chart:
Weekend Trading Conclusion:
In short, I feel both stocks and commodities are oversold but need more time to bottom, and we may see a few more days of lower prices in the near future. I see the dollar starting to get toppy on the daily chart, and once that rolls over stocks should bottom along with gold, silver, and oil.
Once equity prices start to bounce I anticipate money will flow out of the safe haven (bonds) and into stocks, where there are much larger potential gains to be had. All this could play out in a couple days, so I am keeping a very close eye on everything.
Last week my firm bought the ProShares UltraShort S&P 500 (SDS) inverse ETF, anticipating another surge higher in the dollar which would send stocks down in value. So far we are sitting with a gain of 8.2% and the potential for another 4-10% if things play out as I expect.Editor's Note: Chris Vermeulen offers more content at his site, TheGoldAndOilGuy.com.
Twitter: @GoldAndOilGuy
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