The 4^th quarter of 2016 saw the equity markets ride to new highs on the strength of the so-called Trump rally.  While the equity markets were moving ahead solely on the hopes of President Trump’s campaign promises the gold market was going into a fizzle.  The 1^st quarter of this year was the exact opposite.  While the equity markets stalled right along with congress’s failure to push the president’s agenda, gold became the best performing asset.

We’ve transitioned from a stock market driven by the FED and their decision to hold rates at 0 for an extended time to a market hoping that big tax cuts and a reduction in regulations will be approved by congress.

The public’s outlook on the economy is based on political allegiance.  President Obama’s supporters thought the economy was all roses during his administration.  Republicans, not so much.  There’s been a polar shift since the election.  Democrats are convinced the economy is in a death spiral and Republicans think with congressional action it’s all up from here.  As a reminder, the GDP for 2016 ended at 1.6%.  GDP predictions for the 1^st quarter of 2017 range from just under 1% to .50%.  Not good.  Growing concerns over the economy begin to weigh on the U.S. equity markets as the 1^st quarter aged.  Moving into April the equity markets were experiencing long stretches of negative returns.  April was setting up to be the worst equity market since January of 2016.

Then the French election results came in.  Relief that the Eurozone was going to survive the election of a nationalistic candidate caused markets all over the world to stretch for new highs.  The U.S. equity market has never been more expensive.  But wait.  The French runoff election is May 7^th.  We are holding our gold position for a just in case scenario.

Should President Trump’s tax cuts get congressional approval then U.S. markets should continue the upward march.  Meanwhile, we’ve been adding to our international positions in belief that our greatest potential for gain is outside the overbought U.S. markets.