China enters a bear market, gold pulls back and cash is king

Your questions, answered

Market wrap

Markets are tough: rates are higher than expected, volatility is back and China has fallen into a bear market, down 20% from its highs. Copper, one of our key indicators, has lost its 50-day average and may test its 200-day; zinc, Japan, South Korea and BHP are also back at or below their 200-day averages, and Hong Kong fell about 3% on the day. In Australia money has flowed into the banks as a defensive bid. The S&P 500 and Nasdaq are still holding up, the equal-weight S&P 500 is setting up well and bond market volatility (the MOVE index) is settling. US earnings season has been strong. Our satellite portfolio is 100% cash: not panic, discipline.

I’m 47, new to investing and bought DHHF. Which two core ETFs for the next 10–20 years?

You only need one. DHHF already gives you around 8,000 holdings across roughly 60 markets. Over the past year the high-growth and all-growth diversified ETFs have led, while more conservative options are below their 200-day averages because bonds haven’t done their job. DHHF is still well above its 200-day average, which is our line in the sand for the core. Keep accumulating a solid growth core over time.

Should I keep adding to my core during these times, or pause?

It depends on how big your regular investment is compared with what you already hold. If you have a large balance and add a small amount, watch the nest egg more than the dollar-cost averaging. If you’re adding meaningful amounts, a correction helps because you buy more units at lower prices, and it can even make sense to increase contributions. As a guide, keep dollar-cost averaging while your core is above its 200-day average; if it breaks below, that’s when to consider more defensive action.

With diesel costs up sharply as oil rose, are mining stocks uninvestable?

Oil is a real cost for miners, but resources did well earlier in the year even when oil was higher. The resources index (QRE) was at all-time highs in late August and has fallen about 15% in two months, so it’s volatile. Oil hasn’t broken to new highs; it’s in a big base. We’re at a cycle turning point, with the US midterms in early November, after which markets have historically tended to finish the year positively. For satellites, holding cash and waiting is the approach for now.

Why have gold and silver dropped, and will it reverse this year?

Gold rallied almost 200% after a four-year base, so being about 25% off its highs isn’t unusual. Likely causes include profit-taking, liquidation and people raising cash since the Iran war began, plus some central banks needing cash. It may need more time and could be a 2027 story. If it undercut its recent lows in a sharp shakeout, that could be a big buying opportunity. Long term we still like gold.

Are central banks still buying gold?

Yes, generally. Some have had to sell, but the overall shift towards gold continues. Australian gold ETFs had a record quarter of inflows to the end of September, and it was global too. See our monthly ETF performance page for the latest figures.

I started investing in September with A200, BGBL, VAE plus small gold and copper ETFs. Am I missing anything?

You’ve effectively built your own core. A single diversified ETF such as DHHF, VDAL, VDHG or VDGR could replace A200, BGBL and VAE, so you’d hold four ETFs instead of six and could set and forget the core while focusing on satellites. As for satellites, very little is trending right now, so you’re not missing much; cash is king for now.

How do you think things will play out leading into the US midterms?

Expect the President to try for some positive news beforehand, with focus on a possible Russia–Ukraine ceasefire, as polls suggest losing at least one house. There are also rumours of further action on Iran after the midterms, so it’s still uncertain. Once we’re through the midterms the market may start looking ahead, and US earnings have generally been good so far.

Can you share your chart setup and the rationale, daily and weekly?

I use a dual-panel layout in TradingView: daily on top, weekly below, linked by ticker. I use a 200-day simple moving average plus 50, 20, 10 and 6-day exponential moving averages, where big investors often seem to find support. Candlestick charts show the open, range and close, and volume shows how much money is moving. In the end, price and volume are all you have to read the market. Learn more in the base and trend method.

Is ESTX a good move with US and Asian markets falling, or should we build cash?

ESTX tracks the Euro Stoxx 50. I’m not confident in Europe: it’s well below its 200-day average and money appears to be leaving Europe for the US. Shorting isn’t easy either: BBOZ hasn’t even broken out because this is a “stealth” bear market, with big indexes holding up while many sectors fall. Cores look fine; satellites stay in cash.

Which satellites are you watching for the years ahead?

Commodities and gold still look interesting, as does humanoid robotics, potentially the next stage of AI (ROBO has pulled back into its original base). Crypto also looks interesting and Bitcoin has held up well. When the pressure comes off the market, the strongest themes tend to emerge first, like a beach ball held under water.

Do BBOZ and BEAR really behave as intended?

Shorting a broad index is hard because investors hide in the big names. Sector shorts (Australian tech or ex-financials and resources) would have worked, but there aren’t products for them here. Inverse ETFs also aren’t for holding long term, as costs erode returns.

How is AINF shaping up?

It’s down about 10% in two weeks and is below its 200-day average. After a big run, it likely needs time, possibly a 2027 story, unless there’s a sharp shakeout and recovery. I’d watch the semiconductor ETF (SEMI), sitting on its 200-day, more closely than AINF.

Is using AAA worthwhile given brokerage, or am I paying too much?

Cash ETFs like AAA are useful because many broker and platform cash accounts pay little interest. AAA can pay more, and you can sell it and buy something else the same day. If you’ll be in cash for longer, a high-interest savings account may do better; it depends on what your broker pays, how long you’ll hold cash and how quickly you need to move.

Long term, could dominant markets switch from the US to China and Asia?

China is a sleeping dragon, but it has been very weak: DRGN is about 40% off its highs. It needs international money and probably more stimulus, while the US is seen as the safe haven. Asian ETFs have done well mainly because of South Korea, the top-performing ETF over the past year. Japan shows how markets can sit in bases for years and then take off. We wait until the setup tells us it’s time.

Isn’t the only Chinese play that works Hong Kong-listed stocks?

Even Hong Kong is struggling: Tencent is down about 44% in a year and Alibaba is well off its highs. There’s little institutional appetite for China and Hong Kong right now, but that won’t last forever.

Thoughts on VHY?

We held VHY in the income model portfolio and sold when it breached its 200-day average. Since then, money has flowed into banks as a defensive bid, which has helped VHY. But if the market improves, money may flow out of banks, and bank business models are under pressure as property slows. I’m leaning more international for income, such as global income and covered-call ETFs, and would be cautious on VHY over the next 6–18 months.

Thoughts on NDQ?

NDQ (Betashares Nasdaq 100) is well above its 200-day average, but it has been a defensive hiding place and the move was very V-shaped, so it needs to settle. I’d hold it as long as it doesn’t break its recent low and keeps above the 200-day.

Are neoclouds like CoreWeave, Nebius and Oracle bankruptcy risks?

Hyperscaler capex looks uncannily like telecom spending in the late-1990s internet boom. The internet didn’t die, but there was massive over-investment in a short time. AI is world-changing, but whether these companies make money is another question.

ReviewETF’s new ETFs button

A viewer highlighted the New ETFs button on ReviewETF, which sorts funds by listing date. There are now 508 ETFs in Australia, with 50+ new listings this year. Read how to use ReviewETF.

Australian ETF flows and growth

There was about $6.9 billion in net flows into Australian ETFs last month, just short of August’s record of about $7 billion, and the market is approaching $400 billion. That’s still only around 5% penetration here versus about 30% in the US, so plenty of room to grow.

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General advice only, given live at the date shown. Questions are answered generally, without knowing your personal circumstances. ETFs and shares mentioned are not recommendations. Market views change quickly, and past performance is not a reliable indicator of future performance.