I love boxing films. They invariably center around a battered hero who at several points seems defeated but eventually triumphs. If the stock market right now were a fight movie, you could call it: Aging Bull. Despite punishing blows, stocks keep bouncing off the ropes.

Chaos in Afghanistan, hints from the Federal Reserve that it might taper sooner than expected, and rising cases of COVID Delta paved the way for stocks to get clobbered last week. However, last week’s losses were trimmed Friday when U.S. equities executed a stunning comeback for the trading session. Technology stocks led the rally.

The bull market is winded but far from beaten, with the S&P 500 still up more than 18% year to date (see the following table).

U.S. and international stocks remain in winning territory for the year, with what appears to be plenty of momentum left. As of this writing Monday morning, all three major U.S. stock indices were trading sharply higher in pre-market futures contracts. Overseas equities are mounting a turnaround as well.

Beijing gets tough…

Beijing’s continuing regulatory crackdown on its biggest tech stocks helped push Asian stocks lower for the week. China is putting the squeeze on its most famous and richest entrepreneurs, to remind them who’s boss.

Sure enough, dampening global stocks last week were signs that China’s economy is sputtering. Chinese equities year-to-date are down more than 20%, evidence that the central government’s mauling of tech celebrities is self defeating and perhaps a sign of Beijing’s fear of civil unrest.

Hong Kong’s rebellion could spread to the mainland, where many young workers who traveled from rural areas to cities now find themselves unemployed. China is expected to post robust economic growth for 2021 and next year, but in the age of COVID, that scenario is far from assured.

Meanwhile, the 10-year Treasury note yield has risen to about 1.26%, and the dollar has pulled back from an eight-month high against major foreign currencies.

Spurred by worsening fears of inflation, interest rates jumped earlier this year. But after 10-year yields went from 0.9% to 1.7%, they’ve since retreated. The U.S. central bank is keeping short-term rates low, while longer-term rates are getting propelled higher by faster economic growth.

The latest Federal Reserve minutes from its July meeting, released last Wednesday, showed the Fed discussing the possibility of reducing its bond buying program this year. That’s not necessarily a reason for investors to get alarmed.

Historically, the timeframe between the first Fed taper and the first rate hike, which equals about two years, produced returns of 19.3% for U.S. large-cap stocks, 4.1% for small-caps, -2.0% for international equities, and 6.1% for bonds.

Read This Story: Fed Tapering: Nothing to Fear…Yet

Massive fiscal and monetary stimulus has quickened the economic recovery, with U.S. gross domestic product recovering to its pre-COVID level faster than expected. It’s my contention that there’s still lots of runway available for further growth for the rest of this year and into 2022.

So far in 2021, inflationary pressures have come from an extremely narrow set of segments that were profoundly affected by the COVID “black swan” and last year’s business lockdowns. Last month, some of those segments (e.g., used cars and lumber) got back on a more even keel and their costs have decelerated.

This dynamic supports the argument of the Federal Reserve that inflationary spikes are transitory. What’s more, as demand exceeds supply in many areas, business are responding by recalibrating production.

You might be surprised to know that most industries are reporting levels of inflation that are historically normal for an economic recovery. We’ll get more details about inflation trends from the Fed’s annual Jackson Hole Economic Policy Symposium, scheduled to be held virtually this week from Thursday to Saturday.

Midas Methodologies…

To be sure, geopolitical surprises have given the bull market an unexpected gut punch, as the Taliban takes over Afghanistan in the wake of America’s departure.

Read This Story: War, Oil and “Chaos Investing”

However, despite the scenes of horror in Kabul, the Fed’s (slightly) more hawkish stance, China’s recent stumbles, and Delta’s shadow, equities still enjoy the benefits of robust U.S. economic growth and better-than-expected corporate earnings performance.

That said, you need a hedge for your portfolio, which brings me to the “Midas metal.”

Uncertainty is manna for gold investors. There’s enormous potential in the coming months for gold prices to rise relative to stocks. Make sure you’re positioned for it. Every portfolio deserves a gold hedge.

There are several methods for increasing your exposure to gold; your choices depend on your investment profile and tolerance for risk. To learn more about hard asset investing, visit this link.

John Persinos is the editorial director of Investing Daily. Send your questions or comments to mailbag@investingdaily.com. To subscribe to John’s video channel, click here.