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<p>[QUOTE=&quot;Morgan1878, post: 804991, member: 17869&quot;]It&#039;s very simple and it&#039;s all about the dollar. When the dollar goes down, U.S. stocks are less expensive for foreign buyers who have more purchasing power with their stronger currencies. Also, a weaker dollar makes our exports cheaper. In addition, U.S. companies (e.g. Colgate, Proctor &amp; Gamble,etc.) who do business in foreign countries get paid in those currencies which can help their profitability. Lastly, there&#039;s the dollar &quot;carry trade&quot;. You borrow dollars at a very low interest rate, turn around and invest these dollars. At the same time, you &quot;short&quot; (a bet that the dollar will get weaker) the dollar. If this works out to perfection if the dollar continues to weaken, then you book two profits. One is on your investment, the other one is on the trade you did to &quot;short&quot; the dollar. However, this trade can go very wrong as evidenced by Thursday&#039;s market. The dollar got stronger and stocks went down. If you were using a carry trade strategy, you got killed both ways today.</p><p><br /></p><p>The gold trade is again..dollar related. If the dollar weakens, it takes more dollars to buy the same amount of gold, hence the price of gold rises.</p><p><br /></p><p>Lastly, gold is considered a <i>risk</i> asset. When the stock market goes up, there&#039;s a greater chance that the economy will overheat, inflation will result and gold will benefit. In a market like Thursdays which was <i>risk adverse</i>,</p><p>gold was down as much as $50.00 as investors sold <i>risk</i> assets, namely stocks, commodities and gold.</p><p><br /></p><p>Hope this helps..[/QUOTE]</p><p><br /></p>

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