Dear ahhaha,
<<You have the cart before the horse. The currencies move and the stock market responds. >>
You imply that I said the currencies follow the stock markets on the upside. Never said that. I said that the US dollar is a greater influence on the price of gold than the US stock markets.
Also, what you say is not true. Stock markets are not going up because the currency goes up. Many foreign stock markets are also going up while their national currency is weak. Stock markets go up because of other factors, including favorable economic conditions. In the past several years, two exceptional factors affected this unprecedented bull market, the Internet frenzy and the explosive expansion of credit at all levels.
<<It is traditional to marry gold and the dollar inversely, but over the last two years the dollar has soared, but gold has remained steady. >>
True. Simply said, gold is already very low and can hardly go lower. Gold is not only a reserve currency (money), it is also a commodity. Although, you can create US dollars out of thin air, you cannot produce gold at will if the exchange rate with the currency that is used to measure gold production costs is not favorable. This explain why gold average price in $US has remained constant near $275-$280 over the last couple of years. This level is just above the average gold total production cost.
<<The configuration that engages the inverse connection without slack is when the US has a high propensity to inflate. Currently it doesn't have such a propensity.>>
We don't have the same definition of inflation. Inflation is a monetary phenomenon. It is best described as the expansion of money. This inflation influences the prices of various goods and services. In the past 5 years, financial assets are the goods that have seen their prices inflated. Some hard assets are now seeing their prices adjusted to reflect this unprecedented expansion in money. Gold and silver will follow.
<<With oil supply building oil price should drop fairly significantly in coming months.>>
Maybe, if the US dump all their SPR on the market. Otherwise, I doubt it. Oil prices are still to low to affect in a major way the GDP.
<< The result of this inadvertent discipline will be that the stock markets somewhat world wide will go to all time highs. >>
Time will tell. But i think the bear market has started. It will be years before you see new highs on the Nasdaq. |
