This compound chart shows the state of play in the world markets. The Fed policy of deflating the US dollar (US$ Index) to inflate a new economic bubble in commodities is having the intended effect. The stock market is up (DJ Industrials Index) as are the commodities markets (DJ Commodities Index) led by a parabolic bull market in gold (spot price over $1200). Short term rates (3month T bill) are headed to zero, thereby encouraging dollar carry trading. But if you measure the stock market gains in hard money (gold) instead of devalued dollars, the rally is an illusion since one Dow share is worth only 8.8 ounces of gold or 12% less than 3 months ago.[chart: Gary Dorsch @ www. marketoracle.com]
