An older article, but still timely in that it shows what scenario can happen.
This is the time period of the brutal 1973-1974 bear market where the S&P lost 50%. I was curious to see what gold did, and also shown is the dollar. At the end of 1972 the Dow was still breaking out to a new high, but from the beginning of 1973 it was all downhill. Also, note the drop in the dollar in the first half of 1973 and some rise in gold. After that, gold and the dollar were a little flatter, but the Dow still dropped. The oil embargo, by the way was in the fall of 1973, but I assume the market could not have anticipated this already in January.
I was curious if we ever get a bear-market during the inflationary 2000-2010, how it could play out.
In a similar situation as in 1973, a pop in gold or drop in the dollar could set the stage to prevent any cuts in interest rates. This might be enough to get the stock market go south and not recover anymore for a while. During this time, gold and the dollar might also take a rest (or even counter-rally). This would be expected after the current long inflationary phase we just endured.
I am not claiming that B follows A since it did in 1973. I just wanted to see if it is reasonable and that nothing speaks against it.
An older article, but still
An older article, but still timely in that it shows what scenario can happen.
This is the time period of the brutal 1973-1974 bear market where the S&P lost 50%. I was curious to see what gold did, and also shown is the dollar. At the end of 1972 the Dow was still breaking out to a new high, but from the beginning of 1973 it was all downhill. Also, note the drop in the dollar in the first half of 1973 and some rise in gold. After that, gold and the dollar were a little flatter, but the Dow still dropped. The oil embargo, by the way was in the fall of 1973, but I assume the market could not have anticipated this already in January.
I was curious if we ever get a bear-market during the inflationary 2000-2010, how it could play out.
In a similar situation as in 1973, a pop in gold or drop in the dollar could set the stage to prevent any cuts in interest rates. This might be enough to get the stock market go south and not recover anymore for a while. During this time, gold and the dollar might also take a rest (or even counter-rally). This would be expected after the current long inflationary phase we just endured.
I am not claiming that B follows A since it did in 1973. I just wanted to see if it is reasonable and that nothing speaks against it.