From MarketWatch: Results from the year just pasted...
Dow: +16% Nasdaq: +10% S&P: +14%
Gold: +23% Silver: +46% Copper: +41%
Crude: Flat Natural gas: -44%
Clearly, the huge decline in oil and gas was behind the rise in stocks... But the rise in the Dow was matched by big increases in Gold and Silver...and a much weaker dollar.
So from the point of view of a Gold Bug or a holder of Euros...the Dow was pretty pathetic in 2006!
Simply put, if you devalue your currency...your stocks can go up nominally...but have no real gains at the end of the year. That's EXACTLY what happen this year...
We had an asset inflation that was based almost entirely on the weaker dollar with expected rises in gold and other metals.
The energy complex was really in a decline from bubble levels...not unlike what's happening in the housing market.
Indeed the declines in housing and energy may have provided the liquidity for much of the rise in stocks...
This is not likely to repeat in 2007... But given the huge and worsening structural weakness of the dollar gold and the other metals still seem like the place to be....
My hunch is that oil and gas will rise in 2007...which will make things even worse for stocks in the coming year.
