At the end of 2014 I described myself as a reluctant bear on the U.S. stock market. For a while that position seemed out of touch as stock prices surged to all time highs during the first 5 months of 2015, but the S&P’s 12% correction from its peak in May now suggests otherwise. However, based on extended valuations, lagging small caps, and a more hawkish path toward the normalization of interest rates, the really big decline I have been looking for is, in my view, still lurking dead ahead.

Meanwhile, there are always some things that go down in a rising market or up in a falling market… or at least go up or down by less. Value stocks, for example, have performed very poorly relative to growth for 8 years, but we believe this is in the process of reversing. More recently, there are sectors of the markets that have declined significantly more than the broad list of U.S. equities: Energy has been clobbered along with other industrial materials, and precious metals have been annihilated, with the price of bullion down 40% and gold miner stock prices down 80%.

Now, I am turning into a reluctant bull on hard assets — in particular, precious metals and especially gold. Decades of experience have taught me that trying to catch a falling knife is a dangerous undertaking. Nonetheless, there are a number of reasons why overweighting hard assets like gold looks to me like the right decision at this juncture. Here are these reasons . . .

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