Is a Cycle Change at Hand?

        ...that it wasn't the end of the bull market that we were experiencing.

        ...that record stock market levels would continue.

 

That has been precisely the right call with the S&P and NASDAQ continuing to hit new all-time highs and the energy market continuing to inflate with oil now at two and a half year highs.

The thing everyone's concerned about this week is bond yields. It's one of the things I've been telling you is a key indicator of market cycles. The US 10-year bond yield has pulled back to its support line of 1.3%. 

 

For the past couple of months, rates have been going up — or inflating — and that has kept gold suppressed while other things — like energy prices and commodity prices and real estate prices — inflated instead.  

I've been telling you how to harness that inflation in your account by owning copper stocks and energy stocks — oil and gas explorers, for example.

And I've also been trying to be a voice of reason during the sell-offs we experienced in January, February, March, May, and June.

Here we are now halfway through the year in July, and I think we're at the beginning of the next cycle or the next rotation, because the bond yields falling is a big signal.

There are a lot of key indicators in the market that I watch and that I talk to you about. Bonds are obviously one of them. The dollar is another one. Volatility is another big one. And I also look at gold prices and stock market levels.

Rates starting to break down weigh heavier than those other indicators. They haven’t officially broken down through support yet. We'll see where they close this week. But merely falling to the level they are at currently is enough to start thinking about what’s next. 

 

And as those bond rates come down, we've seen gold start to tick up just a little bit. It was down below $1,775, for example, and has now ticked back up to over $1,800 as bond rates have ticked down.

 

Other key indicators haven't broken down yet. Copper price is still elevated, oil price is still elevated, stock prices are still elevated.

So the sky isn't falling yet. But might be starting to descend just a bit.

That's the message for this week: start thinking about getting a bit defensive. 

 

Start, if you haven't already, thinking about or pecking away at gold stocks once again, which have been out of favor for almost a year now, really since gold hit its record price late last summer, August of 2020.

Start taking a look at defensive sectors, which I'm now doing in premium publications. In Foundational Profits, we're taking a look at real estate.

Because if you look at the sectors of the S&P for example over the past year, you'll see that real estate has been the third-worst performing sector over the past year. But over the past three months, it's the second-performing.

So defensive sectors like real estate are starting to tick up.

And I’m not buying them yet, but another one to look at would be utilities as a defensive sector.

But definitely time to start looking at gold a bit more closely again.

Not just as gold goes back over $1,800 per ounce.

But also because producers have had a year of production at elevated prices over $1,700. Their balance sheets look good. They've increased their dividends.

And they’re going to have to replace their reserves.

Markets go in cycles.

I was telling you last fall that I was selling gold stocks and then I got long energy in November and December.

The reasoning: bond yields were starting to rise!

And I think we might be at the precipice of another rotation again.

It's the summer. There is light volume, of course, so we have to keep that in mind when looking at the indicators.

People are going on vacation, including myself.

You won't get one of these update videos from me next week.