Stocks, gold, commodities.... they are all going up in lock step. How many talking heads have you heard in the last month or two say that many stocks are correlated making buying indexes as good as trying to pick a basket of stocks? I have heard that more times than I can count from memory.
Well, you are not really any wealthier for the investing you are doing in stocks, precious metals or commodities. At least, not if you are investing using the U.S. dollar as your currency. As Steve Hansen pointed out in his review of a Bernanke speech Monday, the dollar is behaving in a way that doesn't make sense to many observers. Bernanke was talking up fiscal responsibility, but the dollar continued dropping. It seems that just the thought that their might be further quantitative easing was enough to overcome anything else that might effect the value of the dollar.
Everything is going up? Not quite as much as the dollar is going down in many cases, as seen in the following graph from the 5-Min. Forecast:
As Edward Harrison pointed out, when priced in Euros the big advance in September for the S&P 500 was actually very unremarkable with the price on October 4 only about 0.8% higher than on August 26:
All that seems to be happening, on average, is a milling around to accommodate changes in the relative value of the dollar.
In related news, the head of the IMF, Dominique Strauss-Kahn, warned that currency wars were not the way for countries to solve their internal problems. This comes after an article this weekend by Jason Rines discussed the internal issues that the U.S. and China each should be addressing instead of fighting over currency valuations.
And you thought everything was going up.
Disclosure: Long positions in several S&P 500 stocks. Long gold in gold linked CDs from Everbank.