tag:blogger.com,1999:blog-816559531110064247.post8316203406196536882..comments2024-03-08T01:03:44.522-08:00Comments on Humble Student of the Markets: How a gold rally could derail the stock bullCam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-816559531110064247.post-43900328637304995032015-10-10T01:39:53.141-07:002015-10-10T01:39:53.141-07:00Surprise that global equity fund managers were hug...Surprise that global equity fund managers were hugely underweighted in the energy sector.<a href="http://www.jewellers.edu.pl" rel="nofollow">Jewellery Making Education</a><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-816559531110064247.post-7003398171620568532015-08-20T14:12:05.424-07:002015-08-20T14:12:05.424-07:00Cam, you said "Dollar weakness therefore puts...Cam, you said "Dollar weakness therefore puts upward pressure on inflation and a faster pace of rate hikes becomes more likely. The bond market could very well freak out."<br /><br />That may depend on why the dollar is weak. For example, it was weak today, and gold very strong, because economic weakness in the US (e.g., leading indicators well below expectations) is decreasing the chances that the Fed will raise rates. Thus, the stock market was very weak and long term bonds very strong. A crashing stock market, whatever it may do to the dollar, is not going to make the Fed more likely to raise rates.<br /><br />If anything, the Fed will come up with yet another version of QE, despite the St. Louis Fed recently putting out a paper showing that QE has been worthless for anything other than causing an asset price bubble. Or perhaps the Fed will cut rates below 0%, wiping out the money market fund industry, and doing all kinds of other damage to the economy.<br /><br />You said "commodities rise when the economy is expanding and demand growing." That is normally true, but there is another circumstance where that happens, when a central bank prints money too fast in an economy that is getting worse. People who have the currency quickly trade it in for something the central bank cannot print, primarily gold, but secondarily other commodities.<br /><br />In a sense, that has been going on for years, not in commodities but in certain other assets. Ever since the first QE, in which rich people, who have access to the dollars, trade them in for stocks, bonds, art work, houses in places that other rich people live, etc. Why is a Picasso that sold for $10MM a dozen years ago now worth over $100MM? It isn't because the picture is any prettier than it was, it is because the quantity of dollars available to trade for one is so much higher. Commodities, but especially gold, have become a minuscule percentage of the world's total asset value, and should get the biggest price boost as people trade in newly printed dollars for what the Fed can't print.Rick T.noreply@blogger.comtag:blogger.com,1999:blog-816559531110064247.post-52722928847951773452015-08-20T05:18:29.639-07:002015-08-20T05:18:29.639-07:00Insightful prognosis, spoken like an experienced G...Insightful prognosis, spoken like an experienced General proposing a winnable strategic battle plan which covers all probable bases.Anonymoushttps://www.blogger.com/profile/11185431494877878020noreply@blogger.com