If your entire point to this conversation is that when gold goes up, then you should automatically be bearish, I disagree. I don't know where you are trying to go with this. Maybe you should comment on why gold is going up in the first place and try to explain why that has any bearish implication in regards to the U.S. markets. Just saying the economy is bad because gold prices are going up is not a great way to make a case for your position.
When gold is strong it is typically indicative of weak fiat currency and rising prices. Also fear...fear in inept government and banks failures huge debt etc etc. Not a great picture for someone trying to portray a great US economy and leadership. This by he way is taught at my community college econ 101 class too...
andrasnm, I've heard that claim many times. Do you have any cites for research that demonstrates this? Maybe your econ instructor might know of some. TIA, DS
Studies? http://papers.ssrn.com/sol3/papers.cfm?abstract_id=226690 The Gold Standard, Deflation, and Financial Crisis in the Great Depression: An International Comparison BEN S. BERNANKE Strange you should question what is obvious.... Note that fear perceived or real is also a great factor in gold prices and fear mongering real or otherwise is also in a great abundance... birdlflu, anthrax etc etc etc this paradigm of gold and fear is strong as ever.....
I'm sure that I'll see this chart on Jim Puplava's web site, with the appropriate starting point and scale to make it seem like the end of the world is happening. But lets review recent history. The Dow make an all time high at a time when gold wasn't doing squat. The market crashed and came back some, now gold has doubled (barely) because some Indians got an outsourced job and some Saudis dont want their terror funding traced. All that says what about the dollar?
The market came back a lot measured in $'s. But, measured in ounce gold -real money!- the market didn't retrace much since October 2002. This divergence is evidence that their is absolutely no interest in the $ + the stock market c.q. economy isn't as strong as everybody thinks it is.
IN my experience and often times in history, what is obvious is often wrong claims: tulip mania, killing the cats of London in 1666, population exceeding food production, etc. Thanks for the cite. HOwever it was for the period when we were on the gold standard and that was scrapped if I recall during the Nixon administration, so after Bretton Woods was scrapped, the system changed. Do you have anything more recent as that paper deals with the depression of the 1930s. DS
What about demand from a growing middle class in China and India, two cultures that have traditionally veiwed gold as an asset to be acquired?
Very wise people in contrast to the majority of Americans who still believe the $ has any intrinsical value!