<<The quantity of gold produced every year is smaller than its end use, yet it goes nowhere (CB have more than 10 years production on their hands)>>
Production is irrelevant, Zeev. Supply is what counts. The supply of gold has increased dramatically in the last few years because all the Euro central banks were and are selling it off to meet the requirements for the Euro currency.
Also, there is no inflation. With no inflation, who needs a hedge against it? So the price is in the toilet and will stay there.
Stocks are different from gold. Gold is a commodity. Stocks are shares of a company, a bet on the future $ generating potential of an entity. For years now, investors have put their faith in the future value of dollars, not in the commodity gold.
<<similarly there is an increasing supply of stock. >>
There is not an increasing supply of stock available for buying/selling on the markets. So my point obviously went right by you! <g> But if you prefer to ignore some of the factors, then your conclusions are suspect.
The other factor here that is also ignored is the new distributed buying / selling impact of daytraders, and other retail, often on-line, investors. We are obviously in unchartered waters due to the fact that numerous internet and tech stocks are heavily influenced by short-term retail traders who do not act in accordance with programmed buy/sell signals set up by the institutions that once were perhaps the key in day-to day market moves. Many of these same internet and tech stocks are now included in the indices, and thus overly influence the movement of the indices due to short-term trading. Try building that into your model!
Present trends tend to continue or intensify.
I do think that revenue and profit growth will stagnate somewhat and keep prices from getting too much further out of whack, but whether I like it or not, these lofty valuations are not going down 30% or 40% any time soon.
Victor |
