There Is Comfort In Safety – Stocks Vs Gold & Bonds

So far in 2014 we have been seeing both stocks, gold and bonds move higher. Sure this is great as many of us hold some of each asset, but should you be letting go or getting ready to sell your equities to avoid a market correction. And if so, where should you put your capital to profit from this market correction?

We all know that a topping market is not an event, but rather a process. Knowing that, there is no need to panic and rush for the door to sell equities. Tops tend to drag out much longer than one likes to wait and because it this it causes a lot of traders trying to pick a top to get burned with their short positions each time the stock market pushes to a marginal new high.

With that said, the current market environment is flashing warning signals of a sizable market correction of 10% - 20% in the near coming months.

WARNING SIGNS OF MARKET CORRECTION:

• Gold stocks are the strongest sector this year and their relative strength tells us smart money (institutions) are rotating their money into these leveraged precious metal plays.
• The price of gold has been forming a base and rising with the stock market. This tells us fear and inflation is rising.
• Bond prices have been rising, and they tend to be a leading indicator of what the stock market is likely to do next.

Risk-On Vs Risk-Off Diagram

The chart below shows you what I feel will play out over the next few months. BUT keep in mind we need to see the stock market breakdown below support and for gold and or bonds to breakout to the upside before this play should be taken.

There are some other exiting ways to trade the gold sector and you can see an opportunity unfolding on my blog here: BLOG POST

Get My Daily Gold Forecast and Trades here: www.TheGoldAndOilGuy.com