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The Dow Jones just had its best June since 1938. Overall, stocks were up around 7% last month. It was also the best first half for stocks in 22 years.
Meanwhile, gold gained about 8% on the month. As Peter pointed out in his latest podcast, while stocks had significant gains in dollar terms, they actually lost value in terms of real money.
Peter - Stock - Market - Gains - Context
And as Peter pointed out, when you look at the recent stock market gains, you have to put them into context.
The only reason that the market has done so well this year is because it got destroyed in the fourth quarter of last year. Remember, we had the worst December since the Great Depression as well.”
Fact - Quarter - Year - Dow - Percent
In fact, if you factor in the fourth quarter of last year, the Dow is only up one-half percent. The S&P 500 has gained about 1% and the Nasdaq is up .5%. In fact, the Dow Transports are actually down about 9% over the last three quarters, and the Russell 2000 is down 8%.
So, there you get a much better picture of what’s actually going on in the US stock markets than if you just focus on what’s happened in 2019 and ignore what happened in the end of 2018.”
Perspective - Look - Price - Gold - End
To really put it into perspective, look at the price of gold. Since the end of Q3 2018 the yellow metal is up 18%.
That is a huge move in the price of gold during that period of time. Now, I think that in the future we can see even bigger moves than what we’ve just seen, but that put the rise in the Dow in perspective because it’s not the Dow that’s going up. Gold has gone up, so in gold-terms, the Dow has lost value.”
And why has this happened?
It’s all about the Fed.
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