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Nowhere is the inflation argument more relevant today than what we're seeing in the relative...

Nowhere is the inflation argument more relevant today than what we're seeing in the relative performance of the stock market versus gold. After several years of going up and down together, they've begun to diverge dramatically. Since February the April gold contract has dropped more than 7%, while the Dow has risen more than 2%. That's a big divergence, and an encouraging signal that fears of a deflationary collapse have finally faded.
Comments (14)
  • dangerfield
    , contributor
    Comments (14) | Send Message
     
    or is gold leading and stocks will follow (as part of a risk off phase)? A trend since February is not particularly meaningful.
    20 Mar 2012, 08:10 PM Reply Like
  • buyitcheap
    , contributor
    Comments (1848) | Send Message
     
    could it be that gold leads the market down?
    20 Mar 2012, 08:18 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3528) | Send Message
     
    "That's a big divergence, and an encouraging signal that fears of a deflationary collapse have finally faded."

     

    I thought gold is touted as an inflation hedge, not deflation.
    20 Mar 2012, 08:34 PM Reply Like
  • WMARKW
    , contributor
    Comments (10219) | Send Message
     
    It actually beats equities in both deflation and inflation environments.

     

    I just wonder why it's inconsistent for both gold and equities to rise together in an inflationary environment?
    20 Mar 2012, 09:15 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    Poor Texan
    I thought gold is touted as an inflation hedge, not deflation.
    ========================
    "fears of a deflationary collapse have finally faded."

     

    impo
    I think he meant to say that hopes to get a new QEn faded, while fear of inflation is not here yet
    20 Mar 2012, 09:34 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    Gold actually always just goes up. It's a great hedge for inflation and deflation, and during scary times, and during great times (because more demand for jewelry & stuff). There is no state of the world that's not great for gold. Buy buy buy.
    20 Mar 2012, 09:57 PM Reply Like
  • WMARKW
    , contributor
    Comments (10219) | Send Message
     
    Here's a couple studies on gold vs. inflation and deflation.

     

    http://bit.ly/yo231o

     

    http://bit.ly/x3RW4A
    20 Mar 2012, 10:01 PM Reply Like
  • Rhianni32
    , contributor
    Comments (1993) | Send Message
     
    Good to know we didnt have any deflation or inflation from 1980 to 2000
    20 Mar 2012, 10:20 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3528) | Send Message
     
    Thanks Mark. I assume this applies to other precious metals to a lesser degree as most of them have industrial uses.
    20 Mar 2012, 10:22 PM Reply Like
  • Stilldazed
    , contributor
    Comments (2046) | Send Message
     
    Hi WMW,
    With all the fuss right now about how bad the PMs are doing it might be time for you to buy some PMs since you sold all of yours and donated to charity. As negative as all these articles are (except Avi) they have to be getting ready to take off.
    21 Mar 2012, 02:40 AM Reply Like
  • WMARKW
    , contributor
    Comments (10219) | Send Message
     
    Stilldazed.....I think that sounds like a good opporunity. You remember you get to deduct the appreciated value as a contribution and you don't have to declare the "capital" gains. The charity is the big winner.
    21 Mar 2012, 08:55 AM Reply Like
  • montanamark
    , contributor
    Comments (1434) | Send Message
     
    in 2001 gold was 250, after the so-called dramatic 7 % drop mentioned above, its still at 1625ish; in 01 the dow ranged between 11000 and 10000 (not that far from where it is today). the selective item above also conveniently omits the plunge in 2008 from 14000 to 6500.
    wheres the deflation in oil, in gas, in food, in health care, insurance, in education?
    20 Mar 2012, 09:33 PM Reply Like
  • William Edward
    , contributor
    Comments (62) | Send Message
     
    I think I will hold on to my PMs. Inflation has to be the end to all this "money" floating around the world. This will not end well.
    20 Mar 2012, 09:58 PM Reply Like
  • Wm the Shrubber
    , contributor
    Comments (19) | Send Message
     
    The deflationary collapse has simply been further postponed as the reflationary experiment continues to hold sway. Courting inflation is a dance with the devil. It will mask the true nature of the debt problem for awhile, but the devil always gets paid!
    20 Mar 2012, 10:27 PM Reply Like
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