If gold continues to run up and the dollar tanks, does the general stock market run or crater?
I just don't get the levitating act we're getting with the stock market. It's looking like a real bull, but where's the value?
More to the point, is Greenspan talking deficit trash and reflating like crazy under the table? Where's all the liquidity coming from that's driving U.S. equities?
Investors' Intelligence is calling this a fool's rally, but we're in the right spot in the decennial business cycle for a big run. The four-year cycle says the party should be over here.
Jerry Favors re-ran Edson Gould's old formulae that successfully forecast the 70's bear blowoff and the end of the secular bear, and based his new calculations on the market break in 2000. He got a blowoff spike low at the end of next year, or early in 2006. Chartcraft/Investors' Intelligence worked right behind him with the same data and got about the same answer. Chartcraft is continuing to say 2005 is looking like a tough year.
Any thoughts?
Economic theory is just theory and can fall victim to unforeseen political events, war, embargo,terrorist attack or an attempt of the President and Congress to buy us out or recession.
That said if you place a 20 year gold chat on top of a 20 year dollar chart you will see inverse spikes and dips.
Stock market, I am not sure but investors do not like uncertainty. The big difference now from the 1970's is that the market has lots more traders and fewer investors. Traders and investors have very different market strategies. If the traders can hang in there the market may not crash. However, each time the dollar declines the market takes an invisible hit.
The Economist says "Don't watch Greenspan watch OPEC."
If you adjust the current rise to account for dollar decline it's pretty much a flatline.