Gold Price - Ignored By Investors As It Becomes Undervalued

London (Dec 27)  Gold has been on the decline since July 2016, when it made its last recent highs. With the unexpected "Trump" Rally nearly reaching 20,000 on the Dow-Jones Industrial Average (^DJI), investors are trying to disseminate what to expect for 2017 as well as the next four years while Trump is in Presidency. Numerous moving parts currently contribute to the markets excessive increase in value. The rise of interest rates to .5 - .75% by Yellen on December 14th is one factor that plays a role. Interestingly enough, the markets did not react much to the news and still maintained a decent level from highs, which produced a -1.61% drawdown since SPDR S&P 500 ETF ( SPY) reached $228.34. Investors are still in the wind as to what the market will do for the next one to four years. Investors are also wary due to the increased P/E multiple in the stock-market which leaves room for concern on whether stocks are way over-priced.

With the market near highs, one must wonder who is buying at these extreme highs. Volume on SPY has decreased significantly over the past few months. The Average volume on SPY has gone below the 100 million mark. Small size seems to connote participants temporarily leaving the markets, possibly for the exact reason of the recent rally. However, if investing at highs makes you cringe, don't worry! There are still opportunities to find to increase your portfolio. An example would be hedging opportunities for your portfolio when the Dow-Jones has touched just below 20,000. Additionally, this enables you to cap some of your portfolio risk for uncertain times. Indeed, these are uncertain times in the markets. Trump who enters the office on January 20 th, has a different financial outlook for the country which could influence new financial and tax policies that could hinder and even wipe out the current bullish market momentum for the long term. Consider the Obamacare policy which has totally changed the way our healthcare system is running and how it impacted the market as a whole. With the possibility of Trump changing the Obamacare system, could cause the market to pull lower or move higher. No one can know for certain what the effects will be, but an investor can prepare for tentative times such as today by purchasing (NYSEARCA: GLD).

Source: SeekingAlpha