Friday, December 11, 2009

Dollar Up; Implications for Gold and Stocks

In 2008, the last time the dollar had a strong up-move, this was in the setting of a collapsing economy and panic; gold outperformed stocks by a lot. Now the dollar is strengthening, and stocks are outperforming gold.

GLD is outperforming GTU. If that reverses, I would like to call a bottom on both of them. About 1-2 weeks ago, I called for 110 +/- 2-3% as a bottom for the GLD correction. We are at 108.88.
I have already started buying in on my elective, trading part of my gold holdings.

The optimism on GTU is a bit to my dislike, though. I suspect another shock to the latecomers to the gold story has a good chance of occurring.

So far as stocks go, good news on the economy is sending Treasury rates higher and may send stocks to a halt.

Copyright (C) Long Lake LLC 2009

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