9 Picks for the Summer Doldrums

05/21/2012 11:00 am EST

Focus: ETFs

Mary Anne & Pamela Aden

Co-Editors, The Aden Forecast

While “sell in May and go away” is more a witty aphorism than a rule, the summer is slower for stocks…but it’s a good time to position for the fall, write Pamela and Mary Anne Aden of The Aden Forecast.

The summer months tend to be a seasonally low time for gold. We can’t stress enough to take advantage of further weakness to buy.

The good news is that gold and silver both held at their key December lows. It’ll now be important to see if they stay above these levels at $1,540 and $27, respectively. If so, it’ll be a good sign that these markets are bottoming and the worst is over.

Use weakness below $1,600 on gold and $30 on silver to buy or add to your positions. This is one of those times that can be difficult, but we don’t think you’ll regret it.

On the upside, the metals will begin to look better above $1,620 and $33. Gold’s fundamentals are solid, demand is strong, and it looks like this weakness will be temporary.

Among ETFs, we hold Central Gold Trust (GTU), iShares Comex Gold (IAU), and iShares Silver Trust (SLV). While premature to say, the shares look like they may have finally bottomed. And if they have, they’re likely leading the way up for the metals.

Some of our favorite individual shares include New Gold (NGD), Silver Wheaton (SLW), and Royal Gold (RGLD).

Meanwhile, as economic tensions mount, bond prices are soaring as interest rates plunge. Bonds are the No. 1 safe haven, and they’ll remain super strong with the 30-year yield below 3.10%.

Continue to buy and hold long-term US government bonds. We also recommend buying Rydex Long Bond (RYGBX), Barclay’s 20+ Bond Fund (TLT), and Barclay’s Long Term Treasury (TLO).

The US dollar is also surging, and benefiting as a safe haven as well. The US dollar index broke above its mega moving average, and if it now stays above 80.75, it’ll be a strong sign the dollar is headed even higher, at least in the months ahead.

The currencies are very weak, and that goes for all of them. Continue to keep your cash only in US dollars.

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