Tactical Strategy Allocation – Sprott PM Projections

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Published : September 09th, 2022
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Category : Market Analysis

Chris sits down with Craig Hemke of Sprott Money to talk about tactical strategy allocation and the recent moves in precious metals, bonds, and the US dollar.

How will the pending energy crisis in Europe affect global markets?

Is the Central Bank tightening by the US Federal Reserve driving the bond and stock market lower and the US dollar higher?

What effects are these factors, and more, having on precious metals? How do we navigate through this type of market climate?

Tactical Strategy Allocation = Capital Preservation

At the heart of the investment strategies Chris has developed lay two core focuses:
– protect capital
– do not hold assets falling in value

Tossing out the historical strategy of ‘buy-and-hold-no-matter-what,’ Chris focuses on a position hierarchy of stocks, bonds, currency, and cash positions. If stocks are not in favor, he looks to bonds. If bonds are not in favor, he focuses on the US Dollar ETF UUP. After that comes the inverse dollar ETF UDN and finally T-Bills to earn a little interest while waiting for the next opportunity.

What is interesting here is that the last three positions are essentially cash. When volatility is high, and most people are jumping in and out of trades or trying to pick bottoms or tops, Chris moves to one of these cash positions to better protect capital while still seeing overall growth.

Bonds Could Kill your Retirement and lifestyle

Is there any other word to describe the YTD look at the performance of bonds than bloodbath? Having already lost approximately 30% of its value from the high during COVID, one could think, “it can’t get much worse.” What this equates to, though, is trying to pick a bottom – a dangerous gamble for those who are nearing retirement or are already there.

The reality is the bond market could fall by another 20-30%, taking everyone still invested with it. With only 40-50% of their original account balance remaining, those who held on for dear life will have to downgrade their lifestyle and potentially be forced back into the workplace looking for a job to fund their retirements and

US Dollar Is NOT WHAT YOU THINk

Looking at the US dollar is a way to get a feel for the fear in the market. It’s also a good signal as to where money is flowing globally. Should the stock market and bonds break down 20-30%, one of the best places to be will be in a cash position. YTD, the US dollar, has been performing really well as an alternate investment, and knowing we can profit from the dollar moving makes it a perfect low-risk way to generate growth.

Stock Market Has NOT EVEN STARTED A BEAR MARKET YET

Using Fibonacci on the ABC correction on the S&P 500 weekly chart, we can see that the next downside move at .618 and 1.0 is -7% and -19%, respectively. Generally speaking, the bond market will follow the stock market down, and should this happen, the financial outlook of most people will dramatically change for the worse. Unless that is, you implement a strategy, such as CGS, that benefits from this type of environment.

Precious Metals COULD MELTDOWN BEFORE NEXT MAJOR RALLY

Looking at the Weekly Chart of Gold Futures is a shock to the system of what may be on the horizon. How well have we learned the lessons from the 2013-2016 breakdown? If the support level around $1680 doesn’t hold, where will be the next level of support? Taking the span between two highs and two lows on the chart is a fairly accurate measurement tool and indicates that the $1300 level is not that far-fetched.

GET CHRIS VERMEULEN’S ETF TRADE SIGNALS AT:
WWW.THETECHNICALTRADERS.COM

Disclaimer: None of this material is meant to be construed as investment advice. It is for education and entertainment purposes only. The video is accurate as of the posting date but may not be accurate in the future.

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Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and author of the book: 7 Steps to Win With Logic Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better. His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility. He has also been on the cover of AmalgaTrader Magazine, and featured in Futures Magazine, Gold-Eagle, Safe Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and dozens of other financial websites.
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