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November 22, 2009 – Comments (8)

I'm having trouble sleeping (bad) and I was going through some of the older blogs.

Back in June, or around that time frame, some of our Top Fools got into heated debates about the length of the rally and the gold market. 

They appeared to fall on one side or the other. 

Bulls: The market will go up and gold will fall to $650-$700 (I think I read checklist34 saying S&P500 to 1100 by Dec 2009 and gold down to $700. Sorry if I got that wrong dude. I'm too lazy to go back and find it.)  So one out of two gets you in the Hall (in baseball.)

Bears: On the other side, we had the bears saying the rally was not shinola and gold was going to reach new highs.

How is that both were half right (wrong)?  How do we have gold at all time highs and the rally still going at just about 1100 at Thanksgiving?

I'm not trying to start anymore slap fights between porte and gmx (I've been in too many of those lately anyway), but.........

I'm just curious to hear some thoughts on this.  I suspect the answer on one side will be "gold is in a bubble" and the other side will be "stocks are in a bubble."  Are they both wrong?  Are they both right?  

David in Qatar 

8 Comments – Post Your Own

#1) On November 22, 2009 at 2:49 PM, starbucks4ever (85.99) wrote:


Nobody can know that for sure. We simply have no idea how much liquidity the Fed is going to produce and by what factor the banksters will multiply that liquidity.The correct number could easily turn out to be 300% greater or 50% smaller than your best guess. My opinion is, S&P is 15-20% overvalued at this point, and gold 30-40% overvalued, but that assumes the doubling of the money base is not followed by more printing. If printing continues at the same rate, then everything is dirt cheap.

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#2) On November 22, 2009 at 3:08 PM, DaretothREdux (51.35) wrote:


The answer is actually very obvious:

Dollar up, market and gold down.

Dollar down, market and gold up.

The dollar recently reached a 52 week low and is close to breaking the all-time low. So, then perhaps neither is over-valued in terms of dollars, especially if the devaluation of the dollar continues (and we have no reason to believe it wont :-/)


I don't know if that link embed worked...

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#3) On November 22, 2009 at 4:14 PM, AndreylikesMTL (96.23) wrote:

Agreed with Daretoth

If we are gong to measure stocks and gold in US $$ , it is obvious that chipper $ will create more expansive gold and stocks.Gold is one thing, but Stocks are many, and each stock has different value in it.In my opinion some of S&P 500 and DOW stocks are overvalued, but a lot of others are undervalued, Irish Banks for example AIB, and IRE. They have lost 50 %!!! In last correction.

Disclosure:  Combine, they are still 35% of my portfolio. MTL 30%, REV25% WAL10%I think market, and gold will keep going up slow, but undervalued stocks will catch up quicker.


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#4) On November 22, 2009 at 5:02 PM, SuperPicks (28.31) wrote:

Bro, asset prices have been way more correlated past 5 years then they have ever been.

If the market were to fall, so will commodities including gold. 

Opposite is true and that is what you have been seeing.  Any bulls or bears making claims that refute this are delusional. 

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#5) On November 22, 2009 at 7:11 PM, RonChapmanJr (30.08) wrote:

Q. How did no one guess the future correctly? 

A.  None of us are God.

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#6) On November 22, 2009 at 9:01 PM, chk999 (99.96) wrote:

I think Dare has a pretty good grip on it. If real estate had not just had such a huge bubble it would be going up too.

I think high quality foreign companies are a decent hedge against the dollar falling. Since they are high quality, they will grow and have higher real profits over time, which will look even larger as they get translated to dollars. 


Chris - long GSK, SSL, and other high quality companies

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#7) On November 23, 2009 at 11:26 AM, nzsvz9 (< 20) wrote:


DaretothRedux (what does that mean anyway?!?!) is on target. Gold and Stocks are tangible, paper money is not. Lots of paper is flowing into commodities, gold, and stocks as the cheap money makes them more valuable in the longer term.

The administration is working to prop up the dollar (at least verbally) to ward off more devalution.

The market is reacting to the policies on money.

But you already know that?

Known as NEM stockholder nzsvz9

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#8) On November 23, 2009 at 12:41 PM, Melaschasm (70.28) wrote:

Inflation tends to increase nominal prices. This year commodities and stocks seem to be where the inflation is at.  It would benefit me personally if housing absorbes most of the inflation next year.  However, that market seems likely to lag behind stocks and commodities for a few years.

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