If the tech boom runs out of steam, this is the investment you’ll want to hold

'Don't fight the Fed' seems like a trite clich nowadays.

But with the European Central Bank (ECB) now fully signed up to the money-printing pact, it's truer than ever.

Between the US, Japan, Europe, there are an awful lot of feds on the case right now. And the tactic is pretty clear asset price inflation.

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I, for one, have chosen to run with the multi-faceted Fed machine, rather than fight it. My exposure to equities has risen alongside the market. But, as I mentioned last Friday, my exits are well covered.

Gold is my ultimate insurance policy. Many complain that it's flighty, unfathomable, and frankly unreliable. Me, I'm not so sure.

Let me show you an indicator that, while not perfect, rather sums up gold even makes it kind of predicable.

A match made in heaven, or hell?

It's generally been in the doldrums since hitting 2011 highs around $1,900. Since then, we've seen the downside countered by its opposite counterpart.

What, you didn't know that gold had an equal and opposite?

Well, it does: good old technology stocks.

Tech stocks embody everything contrary to gold. Tech is risk-on'. Gold is risk-off'. And you don't need me to tell you that the markets have generally been risk-on for some time now.

Tech stocks also require investors to suspend their demand for immediate payback. The tech promise is one of future reward.

Gold, on the other hand, promises little for the future. Its promise is delivered in the here and now. There's no promise of growing Ebtida, no plans to take over the world it's not for those that want to get rich quick. Just buy the stuff and put it somewhere safe!

When you consider it, it's little wonder that these things should be inversely related. The tail end of 90s saw the meteoric rise of dotcom. Dotcom was, of course, the ultimate embodiment of tech investing. Who needed gold? This was the barbarous relic. Central banks the world over threw the stuff on the garbage heap.

It wasn't until the tech bubble burst in 2000, that gold suddenly presented itself as the comeback kid of the decade. Tech out, gold in.

And what's really interesting is that this inverse relationship seems to persist today.

Here's the chart. See what you think.

Five years of tech stocks vs gold

This chart plots the relationship between Europe's top tech companies in blue and the UK's top gold exchange-traded fund (ETF) in pink. It isn't perfectly inverse, but there's an uncanny negative correlation going on here.

Essentially, the chart shows how sentiment takes effect on these two very different investment sectors. When the markets are bullish, and tech is in the ascendency, it's not a good time for gold.

But as investors get the jitters and tech is sold-off it's more likely to be a good backdrop for Old Yeller.

As I say, this is by no means a perfectly inverse relationship. But it's an interesting notion.

Right now, sentiment is with the risk-takers. It has been for quite a few years. Those that were bold enough undoubtedly made good money in the second technology wave. The gold bugs have taken a time-out.

But really, there's no need for rational investors to take a partisan view on this one.

Run hare and hunt with the hounds

However, that's no reason to automatically assume that stocks will take the same deleterious route from here. This tech boom is not its dotcom predecessor.

I've been making the case that the centrally-planned (rigged) markets appear to have more upside than downside risk to them right now.

Of course, it would be extremely complacent to put all my money (or suggest you put yours!) on the assumption that I'm right.

What we really want is a foil to all that positive sentiment an antidote to the euphoric sentiment manifested in this tech rally.

And the best investment in that respect is gold.

In fact, the structure of the gold market has seen some important changes over recent months. I'm talking about the way the stuff is traded, both in London and across the globe, particularly Asia.

We'll catch up on that next week.

In the meantime, it may well be worth topping up on your insurance policy just now. Especially if, like me, you're feeling a little woozy about that tech stock run up.