A few days ago in Not About The Dollar? I wrote
“Cracks have been forming in this pattern though. Today for example stocks sold off sharply, while gold and bonds both went higher. There was no clear evidence of a broad movement in the currency. Is the cusp of the divergence we’ve been looking for?”
Evidence continues to accumulate. Treasuries and gold have continued to rally sharply, while stock prices have gone their own way … down. Gold says the USD is crashing, but stocks are outpacing its declines. In just ten days gold has risen 9.4% in dollar terms. Gains for treasuries vary according to duration, but even the broad Treasury index fund GOVT has risen 3.7%, in addition to sporting a fat 4.5% yield.
As the esteemed Wolf Richter says, “nothing goes to heck in a straight line”. Trends are marked by opposing subtrends. But the evidence suggests the prevailing trend for stocks is down. Our patient, underweight stocks, overweight gold and treasuries bias is being rewarded.
“When its time to shine comes, it will be hard to miss.”