Right now, we still give the Fed, the economy, and the bull market the benefit of the doubt.  But we do want you to be aware just how important the 12,500 level is for the Dow.  Be ready to exercise more caution if that level breaks. One way to exercise caution is to put more money into gold.  Gold has proven its worth in both inflationary and deflationary times.  The only time gold flounders is in periods of disinflation or when its price is artificially fixed (which was the case for part of the last century). Gold prices are no longer artificially fixed, and we are clearly moving into a period that will be marked by either inflation or deflation, not disinflation.  So gold should once again shine. Incidentally, gold has been consolidating for the past while.  However, we note that the yellow metal was little changed last week in terms of the U.S. dollar, which, for the first time in a long time staged a rally against the European currencies.  This suggests gold is starting to appeal to a wider crowd of investors.  Instead of being treated just as a hedge against a declining dollar, it's being seen as a hedge against an economic upheaval that will spare no country if it occurs. In conclusion, we still are betting on inflation and growth as the dominant trends.  But again, don't take your eyes off the Dow. 

Until next week,

Stephen Leeb
Editor,
The Complete Investor