Precious Metals

Last month we wrote that we had no interest in playing even an “oversold bounce” in the precious metals, and our view hasn’t changed. Crude oil has already fallen to its long-term, inflation-adjusted mean; if gold does the same, its downside extends below 700.

The Major Trend Index remains positive and net exposure in both portfolios is 64%. For all of 2013, our average net equity exposure was 60% in each portfolio.

For 25 years we’ve tracked hypothetical industry group portfolios comprised of the previous year’s “Dreams” (20 best performers) and “Nightmares” (20 worst performers).

The Major Trend Index remains positive, but we reduced our target exposure from 62% to 60% using a short ETF as we believe this position will be temporary in nature.