(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
Apparently, the Federal Reserve cannot print money quite fast enough. On Monday, August 8, the S&P 500 priced in terms of gold finally broke the March, 2009 lows.
Source: stockcharts.com
(Note that the ratio of the S&P 500 to gold was 0.75 at the March, 2009. The ratio hit 0.65 on August 8th).
This decline continues an historic decline for the stock market versus gold that goes back at least to 1998 (the data I had available at the time I wrote: “Priced In Gold, the Stock Market Continues to Struggle.”)
{snip}
This latest crash in relative value was exacerbated by a climactic sell-off in the stock market at the same time that gold nearly went parabolic.
Source: stockcharts.com
{snip}…setbacks in gold prices should prove “transitory” – to borrow a term favored by Chairman Ben Bernanke – to the extent that central banks and financial authorities must continue to resort to printing money and related tricks of financial engineering to plug holes in the global economy and financial system.
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
Full disclosure: long GG, GLD, SLV, PAAS