Talking Point: There was no stock market rally today
Some media reports are trying to spin today’s stock market activity as a “rally” tied to what is purported to be good news — that the U.S. Federal Reserve will be buying $300 billion in U.S. Treasury bonds.
Don’t believe the hype. There was no stock market rally today.
The Dow and S&P 500, indexes of dollar denominated stock prices, increased by only 1.2% and 2.1%, respectively, on the same day gold futures rose 4.2% — which means stocks declined in value today, but not as fast as actual dollar bills did.
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For awhile, I’ve believed that the dollar had by default pegged itself to oil. But oil coming so far down from its peak, while gold kept going up, was odd. I admit I’m still kinda WTF @ that one.
@b-psycho — I’m not a commodites analyst, but if I may be permitted some loose conjecture, here’s what comes to mind…
It has long been rumored that central banks have been keeping the price of gold artificially low as a way of attempting to hide their inflation of money supplies. IF true, that practice may be coming to an end as their resources become strained. If the overt price of gold is out of sync with actual supply and demand, more so than the price of oil, the price correction process could be “lumpy”, moving in fits and starts. As the value of the dollar declines, though, one could expect to see a matching rise in petroleum prices, even though it lags behind the correction in gold prices.
You may have just spotted a market opportunity.