Tuesday, May 19, 2009
It's not clear whether or not the recent development of the trade weighted U.S. dollar and gold moving together again portends a similar move lower in equity markets as seen over the last year, but it's possible. It could be another "head-fake" as seen in mid-April that some analysts cite as the point in time when stock markets began losing their "mojo".
Both the dollar and gold have served as a flight to safety over the last year. Normally there is an inverse relationship or no correlation between the two but, when they begin moving together, equity markets have had a nasty habit of moving down.