I just found a chart on the Web that summarizes my thoughts on the run-up in the current market. The chart which plots the price of gold versus the S&P 500 since 1971 shows that for the most part these two investments have run counter to each other (you can see the chart by clicking on my profile and going to my page). In the 70's gold soared while the market stayed flat. Inflation no doubt played a part in that. In the 80's and 90's during the current bull-market, the market soared and gold performed poorly.
In 2000, as the stock market was melting down, gold started its ascent. And that's where it gets interesting. Since 2002, roughly the start of the Iraq war, both gold and the stock market have moved higher in tandem, an almost unprecedented occurrence.
Looking at this chart, it's not hard to see that at some point the two asset classes have to diverge. The question is which one, when, and what will the catalyst be.
Related Articles:
Is Gold Perfect Hedge for the Collapsing Dollar? by Sam Cass - Mar 03, 2008
Another Case for Gold by Sam Cass - Mar 03, 2008
Semi-interesting discussion on where the market is going. by Thomas Bivens - Jul 09, 2007
What do hot markets and Paris Hilton have in common? by carroll - Jul 14, 2007
Rising Fuel Costs abd Slumping Housing Market Can't Derail Market by PhilR - Jul 15, 2007
July 16, 2007 - A Who's Who of Awful Times to Invest by Sam Cass - Jul 17, 2007.
