Tuesday, October 13, 2009

The dollar's collapse the stock market's rally and gold

The Stock Market (S&P 500) and the US Dollar Index. Click to enlarge.
Why has the SP500 continued higher even when earnings have been weak and unsustainable and demand has been virtually non-existent? There are several contributing factors such as the oversold condition, sentiment, etc. but our favorite one is that the Government is debasing our currency and in the process it is driving asset prices but not their actual values higher. After all, if your investment in the SP500 is up but the actual value of your dollar is equally low then have you actually made any money?
Read the rest here.

2 comments:

DNY said...

And this is why about 1/3 of my pension money is in overseas investments. (And no, I won't be rebalancing that if it trends higher.)

John (Ad Orientem) said...

DNY,
I concur with your investment moves. Right now my favorites are VGTSX GIM PRPFX GLD and GDX. I like SLV too though I don't currently own any.

John