Traders & Investors Club

On the following chart, you can see the S&P500 index priced in US Dollars.

Wasn't it a great time to be in the market since the botttom in 2003 and later the astounding recovery after the global financial crisis in 2007?

S&P500

However, all is not as it seems.

On the following chart, you can see the S&P500 priced in 'real money', i.e. Gold:

S&P500 Priced In Gold: undefined

And here is the S&P500 priced in barrels of crude oil:

S&P500 Priced In Crude: undefined

And here priced in a basket of commodities:

S&P500 Priced In Commodites: undefined

What conclusion can we draw from the above?

I would suggest that the true top of the bull market that began in 1984 occurred in 2000.

In a true bull market, all asset classes tend rise together.

The rise in the stock market has not been as a result of wealth creation but rather money creation.

Since 2000, we can see a marked divergence between the stock market and 'real things'.

The last decade has been characterised by artificially low interest rates, reckless lending and rampant speculation fueled by cheap or free money.

This has resulted in the erosion of the value of most fiat currencies in relation to the the essential goods that are necessary to maintain our standard of living.