I can hardly believe that such a stupid premise would be entertained. GOLD might te causing stocks' weakness? Hahaha! That's too funny!
At least the author reaches the correct conclusion.
There are now 155,000 metric tons of gold in the world - which might sound like a lot, but it's a cube some 19 meters on a side. I think I once read it could all fit comfortably into two (or was it one?) Olympic-sized swimming pools.
The point I'm making is that this is a very small market, and trading that takes place each day is downright miniscule.
It's pretty funny that, in light of that, anyone would be thinking that gold's tail is wagging the stock market's dog. The article DOES tell us something about the fear TPTB have of gold, and the lengths they will go to to make gold a culprit for our economic woes.
Keep your eyes out for more such articles. To fiat-money adherents (also known as Keynesian economists), gold is anathema. Any resurgence in its popularity must be suppressed at any cost.
May 4, 2011, 3:05 p.m. EDT
Gold not causing stocks’ weakness
Commentary: Gold sector tiny relative to overall market
By MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — It’s tempting to argue that gold’s weakness is a big contributor to the stock market’s decline Wednesday.
But we should resist that temptation.
Relative to the size of the overall stock market, the gold industry is so tiny that its gyrations have negligible impact on the major market averages.
In fact, according to Robert Waid, managing director at Wilshire Associates who is head of the firm’s index research division, gold-related companies as of Tuesday’s close accounted for just 0.2% of the total market cap of the Wilshire 5000 index W5000 -0.52% , which represents all publicly traded stocks in the U.S.
The same conclusion applies to the S&P 500 Index. There are just two components of that index with significant exposure to gold — Newmont Mining and Freeport McMoran Cooper & Gold. Their market caps are $28 billion and $49 billion, respectively, whereas the biggest stock in the index — ExxonMobil — has a market cap of $421 billion.
As Howard Silverblatt, senior index analyst at S&P, said in an email, gold mining companies’ market-cap share of the S&P 500 is “very small.”
To be sure, many prominent gold-mining companies are not based in the U.S., so it’s possible that the sector represents a bigger percentage of the combined market cap of all equities globally. Still, it’s unlikely that this global proportion would be even as high as 1 percent.
Might gold and the stock market be reacting to the same underlying factors, thereby relating the two sectors that way? That’s doubtful, too. For most of recent decades, gold and equities have been inversely related, with gold rising as stocks fall — and vice versa.
The bottom line? It’s likely to be largely a coincidence that the stock market is falling on the same day that gold is also.
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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