In the 1930s interest rates went down and stocks went down
I stand corrected..... Depression... Deflation.
Therefore, are we now going the same path of the 1930's ?
Personally, I do not think so, two very different worlds (imo).
Does the argument for deflation take into account the rate of growth in nearly every country's population in the world, hence creating demand for more and more goods and services ? if yes, that implies continued lower standards of living for most populations, (and incrementally so). I do not see this.
Better communications. Better information sources available to masses.
Bottom line, it will be earnings that will determine if equity markets will go higher or not. For that, they need to sell to growing markets....
Psychological reactions to events such as the Clinton Crisis, while important, they will be more of a short term nature.
If the argument for deflation succeeds, leading to lower prices, that would mean lower prices for commodities, hence lower price for gold.
Why would we assume that gold would go higher, on a long term basis under such scenario ? Psychological "safety" ? I do not see such event taking place.
On a short term, speculative basis, it is possible, but on a longer term, I do not see it happening.
Time will tell.
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