Gold Maintains Value Despite Oil And Stock Market Crash

Investors should analyze 2016 year to date action as it is generally a good predictor of how the year will look.

Major capitulation in oil and global market rout sends investors to the sidelines seeking out capital preservation.

Volatility is soaring and precious metals are holding their values in January.

Lithium is the one commodity outperforming by a wide margin.

Stick to already deflated, deeply discounted sectors like the uranium and rare earths.

It is important to study the beginning of trading in January as major pools of capital tend to re-position around this time for the new year 2016. So far this year it has been ugly, one of the worst starts in history. Oil (NYSEARCA:XLE) is crashing below $30 down over 20% year to date. The Nasdaq (NASDAQ:QQQ) and Russell 2000 are already down more than 10% year to date. Mostly all markets are in the red except precious metals and treasuries (NYSEARCA:TLT).

China’s stock markets started falling followed by the US. Europe is already in a bear market and the US may be near that zone soon on a few more down days like last Friday. The fear of a global financial crisis is beginning. The US Central banks may once again have to step in.

Be careful as this could be a challenging quarter for earnings in the US as the strong US dollar may weigh on sales growth. This is the second major correction in six months for US equities which may signal the four year bull market is in need of a more significant downturn.

For weeks I didn’t like this rally in general equities in the US while commodities such as oil and copper fell off a cliff. Eventually the losses in the commodity sector will be felt by the banks as they are sitting on a lot of debt.

The 30 year US bond is near record highs at 160 which could be a near term top. The US dollar (NYSEARCA:UUP) which has already broken out into new 5 year high territory could also be on the verge of turning over. Investors want liquidity and are moving capital out of junk bonds and equities into precious metals and US treasuries.