Playing The Trade War: Own Gold, Domestic Stocks With No China Exposure - Cramer
(Kitco News) - The biggest winners in this trade-war environment are the U.S. domestic stocks with no exposure to China and safe-haven assets such as gold, said Mad Money’s Jim Cramer.
Cramer’s advice is to sell a few stocks with the most gains in order to protect portfolios from further downside.
“Once you take profits, there’s no reason to start buying immediately,” CNBC’s Cramer said last week. “There is no hurry to start picking among the rubble here. We are now back in the world where international companies will be forced to cut their forecasts.”
Gold’s stellar performance during this risk-off environment is not surprising, Cramer stated: a“As interest rates go down, the alternatives to the stock market keep getting less and less exciting. True, gold is roaring because it always does well at times of economic chaos.”
At the time of writing, gold was near fresh six-year highs with December Comex gold futures last trading at $1,475.70, up 1.25% on the day.
The two gold stocks Cramer advised to buy now are Agnico Eagle Mines and Barrick Gold.
“People will keep buying precious metals as insurance against economic chaos,” the host of Mad Money said. “It’s the classic safe haven for your wealth, and that’s terrific for the gold miners.”
The clear winners from the stock market weakness will be domestic companies with no exposure to China.
“I think it’s too soon to buy anything but the domestic stocks that have zero exposure to China, either as a supplier or as an end market,” Cramer said. “High-quality dividend stocks without much Chinese exposure will be the winners when the smock clears, just as they were after the last two round of tariffs.”
On top of that, investors will likely be able to spot those domestic buys at a discount, added Cramer.
“You will definitely get a discount because it is hard for individual stocks to escape the downward pull of the entire S&P 500 when estimates have to come down for so many different industrials,” he noted.