Higgenbotham wrote:> PS I can't figure out what's going on here. Stocks are going
> parabolic, the dollar is at the low for the year, gold and silver
> are racing higher, yet the 3 month t-bill rate is 0.09own
> 0.03ay. The t-bill rate indicates deflation is actually
> increasing its grip, but that's not consistent with stock and
> silver prices.
I don't really see all these indicators as being linked to one
another. In my view, these trends are all being propelled by
- The parabolic stock market rise is based on fairly low volume,
largely propelled by day traders.
- The dollar is at a low for the year, but there's no longer term
trend here. The dollar is up from the lows of a couple of years
ago, and has largely remained within the same trading range.
- The same is true of gold and silver. Gold was up well above
$1000/oz a couple of years ago, and is currently pushing the top of
its trading range, but not in any exceptional way. I still expect
gold prices to plunge from its current bubble price, once people
realize that there's a deflationary spiral, with no danger of super
- The low t-bill rate is predicted by Koo's theory. People are
saving money, and banks are using that money to purchase treasuries,
pushing yields down.
In "normal" times, these different trends may be more closely linked,
as investors move funds from stocks to bonds to commodities to
currencies and back to stocks. One web site reader has written to me
saying that stock prices and the dollar are correlated, and if that's
true then perhaps some large speculators are moving money back and
forth between stocks and currencies. But basically none of the old
rules apply today since nothing makes any sense. You might as well
invest your money in a roulette wheel bet in Las Vegas.