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Should You Be Investing Offshore?

The US stock market rally may have run its course. But the old saying is that there is always a bull market somewhere. Should you be investing in foreign stocks? Money Watch writes about why foreign stocks are beckoning US investors.

Investors in Wall Street’s long-running bull market are obviously a very happy bunch. But many who now question just how long the party will hold up have started looking elsewhere to move at least part of their money. And these days, the international equity markets are beckoning – enticingly so.

Indeed, recent trends have fueled rallies in Europe and the emerging markets, analysts point out, although the US equity market continues to have an enormous lead on the rest of the world after the financial crisis. Many global market analysts note that prices are no longer cheap by historical standards, but even so, international stocks look more favorable compared with US stocks.

As earnings continue to drive growth the best places to be may well be Europe or in emerging markets. Further down the list is China where there is still great promise but also increasing risk based on excess manufacturing capacity and an awful lot of debt that just keeps increasing.

The underlying risk in investing in China is still that the government controls the economy. An example is the recent shadow bank clampdown that briefly drove Chinese stocks higher. Bloomberg writes about how investors drove stocks higher in the belief that the government will move in to cover bad debts.

Chinese stocks rallied in late trade as markets took a closer look at the nation’s new plans to rein in shadow banks and some traders speculated that state funds would act to stem excessive losses.

While analysts applauded the plan as an important step toward curbing risk in China’s financial system, they also warned of turbulence as markets adjust to outflows from popular shadow-banking products. The government directives, set to take effect in 2019, are the latest in a series of moves to reduce financial risk that have whipsawed financial markets this year.

China is trying to change its economy from a borrow, produce, export and grow model based on increasing markets when markets are not going to keep increasing forever. Likewise many emerging markets show promise but investors need to be aware of the resource curse of boom and bust cycles in economies that depend so heavily on selling the raw materials used by more advanced economies.

Brazil rode high during its commodity boom and has been licking its wounds ever since. Venezuela bought friends in the Caribbean with discounted oil and now its citizens cannot find milk, diapers or toilet paper in the stores. Beware of the resource curse of boom and bust cycles in commodity dependent economies.

However, these economies have gone bust with the onset of the Great Recession and are growing again. Look at the World Bank information on foreign direct investment to see where the smart money is going. Then consider US multinationals that do business in these regions or funds that invest in the region and help you diversify your risk. Last of all consider ADRs of individual companies if you are investing offshore.


Should Investors Be Scared as Markets Cool Off?

Did you lose a lot of money in the 2008 stock market and real estate market crashes? If so you probably wish you had listened to that little voice in your head that said it was time to take profits and sit on cash for a while. It was not like there was no warning. Look at Google Finance and you can see how the SPDR S&P 500 ETF Trust peaked in late 2007! For the next twelve months the market was in an ever-steeper decline.

SPDR S&P 500 ETF Trust

Anyone who listened to that little voice and got out saved of money and had more to re-invest after the market bottomed out. Which brings us to the point of this article, should investors be scared as markets cool off today?

Every Rally Eventually Corrects

Whenever the markets in stocks, bonds or real estate get overpriced there is eventually a correction. Strong earnings have been keeping this one alive but so has the hope and expectation of substantial tax cuts. Most recently the stock market is off because the long hoped for tax relief may be longer in coming than expected. Reuters writes that global stocks fall on U.S. tax reform doubts.

Uncertainty over a U.S. tax reform deal pushed world stock markets further away from recent record highs on Monday.

There was caution as investors waited to see whether a U.S. tax deal would be hammered out soon. U.S. Senate Republicans have unveiled a new plan that differs from the House of Representatives’ version and there are few signs of a compromise.

“All eyes are on what the Senate and the House of Representatives will do on their tax bills,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities. “That there is debate is not surprising at all. Still, it is an uphill moment for markets.”

The immediate concern of the markets is whether we see US taxes cut next year, the year after or not at all. The concern for long term investors is whether or not tax cuts are such a good idea. We wrote about this in our article about Republicans, Economists and tax cuts.

As congressional action progresses so will the belief that tax cuts are in the wings. And thus the market may reignite and continue to go up. But eventually, what drives stock prices is the strength of the economy and one of the factors that drives or impedes the US economy is the cost of the nearly $18 Trillion US debt. In the end the issue comes down to who is right about tax cuts, the Republicans or the economists.

This is not an esoteric argument. Stock traders may make short term profits from the enthusiasm generated by the possibility of tax cuts. And short term investors may do well from stimulated business activity. But long term investors like the Warren Buffetts of the world are essentially betting on the US economy and too much debt will kill any benefits of tax cuts on economic growth and on stock prices. In short congress needs to get this right.

So, should investors be scared as markets cool off? The old saying is that you do not have a profit until you have taken a profit because any hot market be it real estate, stocks, gold or bitcoin can cool off in a hurry. Anyone with an eye toward a successful and secure future will hedge their bets at some point, diversify and hold a bit more cash.


What Are Some Safe Investment Options Today?

Where should you invest today as the stock market reaches new highs and vehicles like bitcoin sky rocket? Are you into market timing or long term investment? Either way the best advice comes from legendary investor, Warren Buffett. His two rules for investment are these. Rule one: Do not lose money. Rule two: Remember rule number one! If you have made some money in the market in the last few years or if you have sat on the sidelines and want to get in, what are some safe investment options today?

The Promise of Trump or Not

The shock of Trump winning the presidency wore off very fast and a market that tanked overnight has grown steadily ever since. Pundits have assumed that the promise of Trump to lower taxes, deregulate, bring offshore corporate cash back home and stimulate the economy with massive infrastructure spending have been the drivers of the market. But very little of the Trump promise has come to pass. Bloomberg writes that Trump policies have done nothing for stocks and it has been strong corporate earnings that have sustained the market rally.

Decomposing stock returns over the last year, our analysis shows that earnings growth is responsible for most of the appreciation in equities. While analysts assessed the potential impact on earnings from potential corporate tax changes, the recovery in corporate earnings was underway well before the election. The S&P 500 has posted an average gain of 1.6 percent a month over the last 12 months. The contribution from earnings has been 1.5 percent on average a month. Treasury yields have climbed, acting as a drag on stock prices. However, this drag has been largely offset by a lower risk premium. That’s not especially surprising given stronger investor optimism.

If earnings are the key to stock market performance the question is how long will earnings last? And what happens when the economy slows and earnings drop? The Trump administration and Republicans say that a healthy tax cut will drive economic growth higher but most economists disagree with Republicans.

Assuming that earnings drive the value of investments what are some safe investment options today? Take a look at our article about how to invest $10,000. Please note that we suggest that you first pay off credit card debt and put enough money to pay the bills for several months in the bank. Then considering buying your own home and taking advantage of the deduction on mortgage interest payments. And finally use IRAs and 401Ks to take advantage of tax deferred savings vehicles.

Investing in companies with cash is always a means of obtaining a margin of safety in a stock portfolio. A company like Microsoft has gone through its incredible growth phase and is sort of hung up the high twenties. However, it pays about a 2.5% dividend and typically has billions of dollars in cash at its disposal. This cash reserve allows a company to weather economic storms without going into bankruptcy and allows it to take advantage of potentially profitable takeover opportunities.

Since we wrote this, 7 years ago Microsoft has tripled in value and trades at more than $80 a share while paying a 2% dividend. The key to determining what is a safe long term investment is calculation of intrinsic value whether it is in stocks, real estate or bonds. And be sure to diversify in order to reduce the risk of one bad decision and increase your chances of finding the next Microsoft just at it goes public.


Is It Time to Sell GM?

GM was the biggest corporation in the world back in its heyday. And then, decades later, it went into bankruptcy during the first days of the Great Recession. GM is back on its feet but what is its future? We asked is GM a good investment in an article 7 years ago.

Despite expectations of an opening stock price for the GM IPO of $33 the stock opened at nearly $35.50. The question, “is GM a good investment,” seemed to be answered with a resounding, “yes.” The stock rose to nearly $36 within minutes until profit taking took the new General Motors stock down to below $35 by 10 am EST. The stock recovered to near $36 again before starting a steady decline throughout the day. So much for the first day after GM stock returned from the dead. For the long term investor the question is not such much the hoopla of first day IPO sales and day traders taking profits.

The question had to do with making a profit and steadily increasing intrinsic stock value for GM investors. In the days of GM dominance this had to do with making an attractive and reliable car at a time when Detroit could expect to sell more cars each and every year. Now with electric cars, self-driving cars and fewer cars in future the question is who can make this work, make a profit and return that profit to investors? In that light we asked a couple of years ago is GM back?

Is GM back? Reuters reports that GM profit tops estimates with an improved profit margin in China and strong truck sales.

And then there was the ignition switch scandal in which GM was aware for years that if someone hung a heavy key chain from the ignition switch of their cars the car could shut off while moving. There were accidents and deaths and subsequently calls of criminal charges against the GM hierarchy. That issue has blended into the background and has cost GM a pretty penny. But the long term issue is if GM can be the car maker of the future and just what the car maker of the future will look like.

CNBC notes that GM stock just took a hit.

The automaker’s stock was downgraded to “sell” from “neutral” at Goldman Sachs, which points to the current valuation and the likelihood of a downward inflection for GM earnings in 2018.

The bottom line, as always, is if the company will be making money and returning value to shareholders into the long term future. Our sister site, ProfitableTradingTips.com looked at GM after a recent analyst upgrade and asked should you buy General Motors stock.

The world of automobiles is changing. More and more folks in cities take public transportation and rent a car for the day or even a few hours when needed. Electric cars may be the only models available in a decade and self-driving cars are on the way. Who is going to thrive in this environment and who is going to disappear? In the glory years for cars in the 1950s common names like Studebaker, Packard and American Motors vanished as the Big Three automakers dominated. Then foreign imports prospered and eventually contributed to bankruptcy of Chrysler two times around and finally GM. There is no promise that large American car makers or any current car makers will succeed in business as the world of cars changes.

That is the bottom line for the car industry. Car makers like GM are where carriage makers, saddle makers and wagon makers were at the beginning the era of the internal combustion engine. Some, like Studebaker, adapted and lasted for half a century but otherwise they become a foot note in history. Is it time to sell GM? It may be too early to tell but anyone with investments in the auto industry needs to pay attention and have a solid game plan or they might just wake up one morning to find that their stock has gone the way of the industries that supported the horse as the preferred mode of transportation.

How Do Events in Japan Help or Hurt Your Investments?

In the investing world it helps to pay attention to what is going on throughout the world. When Japan was the economic powerhouse of the 1980s they were buying up properties in the USA and their stock market threatened to eclipse that of the USA. Even after the economic collapse caused by hidden debt and subsequent deflation Japan´s currency has remained a safe haven and events in Japan still affect Asia, Europe and North America. How do events in Japan help or hurt your investments today? Reuters provides a small example after a victory of Prime Minister Abe´s ruling party in Japan. The Abe approach to the Japanese economy is to stimulate it with an inflationary policies. This is referred to as Abenomics and a victory for Abenomics lifts world stocks as well as the dollar.

Japanese Prime Minister Shinzo Abe’s election victory lifted world stocks and the dollar on Monday, relegating concerns about Spain’s escalating political crisis to little more than a blip on the market radar.

Abe’s emphatic win, which heralds a continuation of Japan’s hyper-easy monetary policy, kept risk-on bets in play after fresh optimism about tax cuts in the United States had pushed Wall Street to a new record on Friday.

U.S. stock index futures pointed to a higher open for Wall Street, tracking gains for other major stock markets.

The spillover from the Abe victory and promise of more easy money in Japan is not just limited to the USA.

Also trading on Abe’s big win, euro zone borrowing costs fell, as bond markets ready for the European Central Bank to signal baby steps away from its ultra-easy policy stance on Thursday and for the U.S. Federal Reserve to hike rates in December.

German Bund futures FGBLc1 were up 0.1 percent.

“Now there’s a renewed mandate for quantitative easing, which means a weaker yen and stronger Japanese government bond prices. It also has a significant spillover for other developed markets,” said Peter Chatwell, head of euro rates strategy at Mizuho.

Events in Japan do not play out all by themselves. Rather they play off of issues such as possible large tax cuts in the USA.

As congressional action progresses so will the belief that tax cuts are in the wings. And thus the market may reignite and continue to go up. But eventually, what drives stock prices is the strength of the economy and one of the factors that drives or impedes the US economy is the cost of the nearly $18 Trillion US debt. In the end the issue comes down to who is right about tax cuts, the Republicans or the economists.

Economists may be concerned about economic policy in Japan or excessive tax cuts in the USA but the markets are excited about potentially higher stock prices based on at least temporary earnings increases. To the extent that events in Japan and elsewhere drive up stock prices you should play attention and to the extent that such policies in Japan or in the USA drive up debt you should beware.

Are There Any Sleepers You Should Invest In?

The stock market just keeps going up. In the depths of the Great Recession you could have bought Amazon.com for $37 a share and now it trades close to $1,000. Amazon.com also has a P/E ratio of 250. In fact the tech darlings that are still driving the rally are all overpriced by historic standards. Are there any bargains left? Are there any sleepers you should invest in? CNBC writes about 5 stocks that have gone nowhere in 2017 but are stocks that may be worth buying.

In the midst of a raging bull market, some stocks in the S&P 500 have seen virtually no gains or losses this year.
But some of them could be worth buying for a breakout, according to some market participants.

Goldman Sachs, Quest Diagnostics, Mylan, Concho Resources and Fastenal have all been trading within 0.2 percent of where they began the year. Max Wolff, chief economist at Disruptive Technology Advisers, says two of them stick out to him the most.

The first of these is big bank Goldman Sachs, which actually fell following its earnings report on Tuesday.

The underlying theme for each of these stocks is the reemergence of inflation as an economic factor and revival of the global economy.

Where Should You Invest?

If you think that the US stock rally has nearly run its course you can search for overlooked stocks or you can look offshore. We have written about foreign direct investment and suggested looking at the most recent World Investment Report published by the United Nations.

Follow the money is age old advice for knowing why something is happening. In this case we would like to follow the money that goes into foreign direct investment. Foreign direct investment is done by folks with lots of money and the intention to stay a course and make a profit. If you are looking for offshore investment ideas, take a look at where foreign direct investment goes year after year after year. There have been changes afoot regarding where foreign direct investment is going. A very useful reference in this regard is the just published United Nations study, World Investment Report.

Whether you are looking for foreign direct investment ideas or simply looking to see where the smart money is going take a look at the most recent 2017 report.

In 2016, global flows of foreign direct investment fell by about 2 per cent, to $1.75 trillion. Investment in developing countries declined even more, by 14 per cent, and flows to LDCs and structurally weak economies remain volatile and low. Although UNCTAD predicts a modest recovery of FDI flows in 2017-2018, they are expected to remain well below their 2007 peak.

The point is that you need to be selective about where you put your money. In order of who is considered the best investment location the USA leads followed by China, India, Indonesia, Thailand, Brazil, the UK, Germany and Mexico. Only the USA, Germany and the UK qualify as developed countries and fall in the best places to invest category.

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How Long Will the Economic Sweet Spot Last?

The stock market seems to be overpriced but every times earnings come in they are positive and stocks keep going up. So long as the economy keeps chugging along it supports earnings but how long will the economic sweet spot last? CNBC writes that the economy may soon lose its power to boost stocks. Then what?

Closely followed strategist Jim Paulsen told CNBC on Monday he’s worried that economic data could stop supporting the stock market’s bull run.

“The economy has been doing so good for so long now that even if it continues to do well, it won’t any longer be a surprise,” said Paulsen, chief investment strategist at Leuthold Group.

“Economic surprises I think are going to get as high as they’re going to get,” Paulsen told “Squawk Box.” “We may see toward year end and the first quarter next year a pause in this market.”

Paulson says there is a wall of worry about the market being overpriced. The economy does not really need to falter to take stocks down. It could simply stop providing surprises. And if something in the economy happens to concern investors there are probably a lot of them ready to pull the plug on their portfolios after making nice profits on the years-long run up.

Where Is the Economy Going?

How long will the current level of economic growth last? Is Trump’s plan to stimulate the economy going to happen and if it happens is it going to work? What does the Fed say and are they going to raise interest rates or not? Bloomberg quotes Janet Yellen who says inflation is the biggest surprise in the economy this year.

Federal Reserve Chair Janet Yellen said that the U.S. central bank expects to continue to raise interest rates gradually as solid growth, a strong labor market and a healthy global economy lift prices even as she recognized that inflation has been surprisingly low.

“My best guess is that these soft readings will not persist, and with the ongoing strengthening of labor markets, I expect inflation to move higher next year,” Yellen said Sunday at the Group of Thirty’s Annual International Banking Seminar in Washington.

Thus the current Fed chairperson expects the economic sweet spot to last awhile. She notes that asset valuations like stock prices are supported by low interest rates and that could be a new norm so long as relatively low rates persist.

Hands On or Hands Off, Which Best?

In regard to Trump’s tax cut plans we wrote about whether Republicans or economists are right.

As congressional action progresses so will the belief that tax cuts are in the wings. And thus the market may reignite and continue to go up. But eventually, what drives stock prices is the strength of the economy and one of the factors that drives or impedes the US economy is the cost of the nearly $18 Trillion US debt. In the end the issue comes down to who is right about tax cuts, the Republicans or the economists.

An argument can be made that things are going pretty well right now and trying to make changes could result in damage to the economic sweet spot that we are in. In the meantime watch the earnings reports and what congress is doing.

How Long Will the Economic Sweet Spot Last? DOC

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Should You Be Investing in Defense Contractors?

Every day seems to bring more bad news about possible conflict on the Korean Peninsula. As the dictator of North Korea and the American President trade insults and threats should you be investing in defense contractors? CNBC writes that the specter of war has driven defense stocks up.

On Oct. 1, President Donald Trump once again took to Twitter to attack Kim Jong-un, saying that negotiating with the North Korean chairman is a waste of time. While social media mudslinging may not be the best way to deal with a hostile leader, there’s at least one group who may not mind Trump’s Twitter threats: defense industry investors.

Year-to-date, the S&P 500 Aerospace and Defense Industry subsector index is up 30 percent, compared to 12.9 percent for the S&P 500. Since July 3, when North Korea fired its first intercontinental ballistic missile and Trump said in a tweet, “Does this guy have anything better to do with his life?” the index has climbed by 14.3 percent.

While most people likely don’t want to go to war with North Korea, the increasingly heated rhetoric is helping many defense-industry stocks reach record highs.

In order for defense stocks to go up and stay up there needs to be an increase in defense spending, not just rocket launches, nuclear bomb testing and twitter threats. Should you be investing in defense contractors or has all of the upside been used up? And how about the long term? Are these stocks good buy and hold bets? In that regard we look at the biggest investments in Warren Buffett’s portfolio and don’t see any defense contractors in the stocks of which he holds a billion worth of shares according to The Motley Fool.

Specific Defense Stocks versus an ETF

Investing in defense stocks can be profitable over time if you pick and choose correctly.

There are over 250 options for investing in defense stocks in the United States. The ten largest US defense contractors account for 1 percent of the US domestic economy. Investing in defense stocks means buying stock in giants such as Lockheed Martin, Boeing with its Boeing Defense, Space and Security division, Northrop Grumman Corporation and, General Dynamics. It also can mean buying stock in Raytheon Company, the world’s largest producer of guided missiles or L-3 Communications Holdings, Inc. which provides the likes of NASA, intelligence agencies and the military with command, control, communications, intelligence, surveillance and reconnaissance (C3ISR). Well-known companies such as Honeywell and Hewlett Packard also do defense contract work although, obviously not exclusively.

As a group defense stocks have been going up for the last several years with the market rally. They have outperformed other sectors of late due to Trump’s wish to increase defense spending. An alternative approach is to buy shares of a defense exchange traded fund. A quick look at Google Finance shows us that the Power Shares Aerospace & Defense ETF has tripled in value over the last six years.

PowerShares Aerospace & Defense Portfolio (Fund) seeks investment results that correspond generally to the price and yield of the SPADE Defense Index (the Index). The Index is designed to identify a group of companies involved in the development, manufacturing, operations and support of the United States defense, homeland security and aerospace operations. The modified market-cap portfolio is rebalanced quarterly and reconstituted annually. The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index. The Fund’s investment advisor is Invesco PowerShares Capital Management LLC.

The rationale here is to let the market decide the winners and not spend time deciding which defense stocks are the best.

Should You Be Investing in Defense Contractors? DOC

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Is Pension Money Keeping the Rally Alive?

Everyone says that the stock market is overpriced but it keeps going up. One reason is that earnings are pretty strong for the market leaders and nothing seems to scare investors when earnings are good. But there is more to the story. When there is a lot of money to invest it tends to go into the market. Market Watch makes the point that money managers are being forced to buy stocks as pension contributions pour in.

Their point is that while many factors drive the market, forced buying is a real driver when huge pension fund contributions roll in, usually on a quarterly basis.

Downside Risk in Offshore Tech

Reuters writes about a similar problem in tech companies in emerging markets.

The boom in emerging market technology stocks is becoming a problem for fund managers of all stripes.

The soaring market capitalization of a handful of companies such as China’s Alibaba (BABA.N) and Tencent (0700.HK) is steadily lifting their weighting in the MSCI emerging equities index .MSCIEF.

This means investors in funds that track indexes (exchange traded funds or ETFs) – who want exposure to a range of companies for a lower fund management fee – are finding themselves increasingly exposed to a single sector.

Meanwhile, active fund managers, who justify charging higher fees for their individual stock-picking expertise, are under pressure to buy those tech stocks to ensure their funds keep up with the index’s gains.

And with both sets of investor chasing the same thing, the risk of dramatic outflows increases if the sector falters.

The increasing values in the tech sectors both at home and abroad are a problem. Add to this a lot of money such as from pension funds pouring in and there is a risk of excess. In general when someone has made handsome profits from a stock run up they may take some money out of that winner and put it into something solid and safe. But if the solid and safe stocks are not making any money the temptation is to leave money in the winners, until they crash!

Active versus Passive Investing

We wrote recently about passive versus active investing.

The longest bull market since World War II has been driven by these big cap stocks: Facebook, Apple, Amazon, Microsoft, Google and Johnson & Johnson. When the time comes for a correction involving these market leaders investors will look elsewhere for profits and that will be the work of active investing and use of fundamental analysis of individual stocks. Active investing is more work than passive but when passive investing loses money active is your only choice.

While simply buying a tech ETF has been profitable for years that situation will probably not last forever or perhaps even through the rest of 2017. Smart investors track their investments using the principle of intrinsic stock value. The main factor is projected earnings but also this calculation requires that your compare the intrinsic value with the current price. When intrinsic value consistently lags market price, the market price will eventually correct. Even if pension fund money is keeping the rally alive for now you can think ahead and adjust your portfolio in advance of a market correction.

Is Pension Money Keeping the Rally Alive? DOC

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How a Stronger Dollar Creates Winners and Losers

A strengthening US economy and the prospect of more interest rate hikes by the Federal Reserve have helped the US dollar stop its recent slide. But how does a stronger dollar affect the economy and the stock market? Today we look at how a stronger dollar creates winners and losers. CNBC writes that stocks could take a hit as the dollar strengthens.

The U.S. dollar is beginning to enjoy a bullish turnaround after declining for much of this year, and some strategists are watching for how its recent gains will impact equity markets domestically and abroad.

Should this bounce continue, domestic markets with large multinational companies such as the S&P 500 would likely take a hit, as the negative impact of a stronger dollar on foreign earnings begins to be felt.

Commodity markets such as crude oil and metals, priced in U.S. dollars, could also feel pressure from a stronger greenback, as could emerging markets, Maley wrote. The inverse moves in the large emerging markets exchange-traded fund, the EEM, were “incredibly exact” the last two times the dollar reversed, he wrote. Specifically, he pointed to the period between September and December of last year, as well as the period between this January and late September.

Since oil is priced in US dollars the cost of oil goes up in foreign markets when the dollar strengthens. This creates losers, especially in developing economies. US exports also become relatively more expensive when priced in US dollars which can hurt US manufacturing. US exporters may continue to price their products offshore in local currencies and that will allow them to keep their customers but will eat into their profits. In the end US exporters are losers with a stronger dollar and foreign competitors are winners.

High Stock Prices Based on Earnings

The US stock market is priced at historic highs based on price to earnings ratios. But as earnings continue to impress investors keep buying. This is the intrinsic stock value approach. So long as earnings stay strong, stocks will remain high. But a stronger dollar could eat into profits and that would create winners and losers in the US stock market.

Poor Gold

Gold is a refuge in times of economic and social turmoil. Gold is what you buy when you no longer trust the stock market or paper currencies. But what happens to gold when the dollar goes up and stocks are hot? CNBC reports that gold is at a seven week low.

Gold sank as low as $1,271 on Tuesday, its lowest level since Aug. 9. And some strategists see the yellow metal falling further still.

“The fundamentals for gold in the long term are not very good. If you look at how gold tends to perform, it basically moves opposite interest rates or the dollar,” said Gina Sanchez, CEO of Chantico Global.

As the market enters a rate normalization cycle, rates are likely going to rise, and with it the dollar, adding to the pressure on gold, she said Monday on CNBC’s “Trading Nation.”

If you are interested in gold investments consider when to enter and when to exit the gold market and which vehicles to use. For the time being gold is a loser as the dollar strengthens and interest rates go up.

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