Called It! We've Had a Big Stock Rally, but Gold Is the Winner

 | Apr 25, 2017 | 12:00 PM EDT
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Way back in the latter part of 2015, when it was becoming clear that the Fed was about to end its eight-year-long period of monetary accommodation and start raising rates, I said that this would begin the upswing of inflation, and while stocks and the economy would not be hurt that badly, gold would outperform.

There's been a lot of hoopla surrounding the stock market rally of late. Many of you have probably already forgotten that last year I was pounding the table to buy stocks when most were bearish. They were afraid of falling oil prices, which I said would rebound -- and they did.

People ran out of the market when the Brexit vote happened, and I told you to go in. Then they bailed from stocks in the late stages of the Presidential campaign, when it looked like Trump might have a chance. Instead, I was long -- and telling everyone that Trump would be positive for the economy as long as he delivered on the policies he was proposing.

Everything I predicted has happened -- although the jury is still out on the Trump promises.

I also said there would come a time when I turned bearish on stocks, but everyone would be buying. That time has come. In recent months, I have turned bearish because fiscal flows have slowed and Trump's plans are nowhere. Even if they are to happen, I see them as stimulative "neutral" because he will be marrying tax cuts, which are sorely needed, with big, big, spending cuts. The result is nothing. Wheel spinning. Shifting money from working class and poor people to CEOs.

But let me get back to gold. I say this (and I am not a gold bug) because this was my main call going back a year and a half -- that inflation would rise and gold would be the beneficiary. And it has risen. Rate hikes are price increases, like I said, and that's exactly how it has played out.

So, how have the markets fared since that call? Let's have a look.

On Dec. 15, 2015, the day before the Fed raised rates for the first time in nine years, gold was at $1,050 per ounce. The Dow was at 17,500, S&P at 2,040 and Nasdaq at 5,070.

Fast forward to today: Three rate hikes later and a huge bull market in stocks that has occurred since the November elections.

The Dow is at 21,000, the S&P at 2,388 and the Nasdaq is at 6,020. And gold is at $1,270.

Guess who won?


Gold scored a 17.3% gain, while the Dow came in with a 16.7% gain and the S&P and Nasdaq scored gains of 14.6% and 15.8%, respectively.

By the way, how fast was the economy growing in the fourth quarter of 2015? It was growing at 0.9%. How fast is it growing today? Well, we'll get the first estimate of that number this Friday, however, the Atlanta Fed is forecasting that the economy grew at just 0.45% in the first quarter. So, half the growth rate of 2015, but stocks are this much higher and investors are cheering and piling in?

It's just the facts, folks. Just the facts.

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