Deflation on Hold

Sometimes things just jump out at you.  At the moment it is there is no reason to own gold. 

The coordinated loan action between the world’s central banks is not an inflationary move.  It has added some liquidity to cover underwater assets and has had the effect of raising long-term interest rates a bit.  Stocks feel better and higher prices seem to be coming over the next six months.  Stocks are gaining on gold and financial stock prices are even starting to gain on T-Bond prices.  Things are probably going to be mellow for a while and the test of the stock market basis the S&P 500 at the 1216 to 1221 level will be the most important thing between now and Christmas.  As we said at the time, the October lows on stocks were the place to be a major buyer.  See October 7th comments in the archives.  Now we will be seeing a series of moving up and backing and filling.