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The Fear Trade Now

Once again, U.S. stocks are strong, led by commodities and commodity stocks...energy, metals, precious metals...particularly precious metals.

Much is made about "risk on, risk off" trades, but you can understand the outperformance of U.S. vs. international stocks, and the outperformance of precious metals and energy, as all aspects of the fear trade, which comes in different "flavors":

1) fear of confiscation: investors worried that their money may be taken from them are looking for places to move it;

2) fear of chaos: investors are looking for safe havens, one reason U.S. stocks are outperforming;

3) fear of inflation, a big mover for precious metals; and

4) fear of the dollar: investors looking to get rid of dollars are putting it into metals.

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