If you are starting to think that stocks cannot keep going straight up regardless of the news, economic data, or monetary policy, then you should consider investing in gold futures. Gold is the one commodity that is a legitimate investment. Throughout history, gold has held its value. Gold futures based a long term bottom in December 2015 at $1,050 per ounce. More recently, gold has based a new bottom at $1,200 per ounce, so all markets must correct. Market corrections are good because they test the strength of a market, and the stock market is long overdue. Most people seem to believe that the rally in stocks over the past seven years was mostly due to artificially low interest rates for an unreasonably prolonged period of time. We will begin to normalize rates in the U.S., because inflation will heat up as jobs come back and as tax reform is implemented. Inflation will be undeniable, and the Fed is way behind the curve.
Gold is typically a great way to hedge inflation, as it tends to performe well when inflation heats up. When money begins to shift from stocks and back into gold futures, we could blow right through the $1,400 and $1,500 levels. Evidence of inflation may be lagging right now, but it will happen.