Cash Is King

We are currently going into the 2nd week of the 2013 fall Congressional budget battle.  There is no end in sight for the government shutdown and the debt ceiling limit debate that is coming up in eleven days.  In years past, when our divided Congress could not agree on big issues, some people fled to bonds and others fled to gold for safety.  Now, even those trades are not working.

The price of TLT, the 20+ year treasury bond ETF, has gone nowhere this past week and neither has the price of gold.  These are now busted safe havens, and the stock market is no relief either because stocks are overbought.  Since bond yields are rising, the price of bonds will continue to fall, and people will not pay more than $1300 per ounce for gold.  So, cash is the only safe haven left.  Then, when stocks finally decline in the near future, the cash can be put to work in quality stocks at that time.  It is a waiting game for now, and patience will reward those who wait.