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Stock Market Up-Trend Continues While Gold Rallies on Dollar Fall

Today marks the 20th anniversary of the fall of the Berlin Wall. Toward that end, I thought a bit of history was in order:

Overnight, Gold hit a new record high, the dollar tanked, and all that Fed liquidity continued to push into the stock market. Below is our graph with trends and indicators. Honestly, everything is pointing up – its truly unbelievable but given the context of the amount of liquidity in the market that has to find a home, I suppose it should not be a surprise.


Below is the chart for gold. You can see how there was a bit of fear and our shortest trend line dipped below the next shortest, but that proved to be a buying opportunity – as most of the dips have in the past year.


The dollar’s continued fall isn’t likely to end soon. Our economy’s increase in debt to unprecedented levels, along with projections for even more, are the most likely reason investors are running from dollars into other currencies (and gold – just see India’s huge investment in gold near the top of the market).

I don’t know how long the trend up in stocks can continue, but as long as interest rates are so low that investors don’t view fixed income as a viable alternative, and the Fed continues to keep the taps open on liquidity, stocks will probably continue to float higher from the rising tide of monetary policy.

On this anniversary of the fall of the wall and lets take a look at the speech that started it all: