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Inflation And Yields: The Gold Standard Is Dead, Long Live The Gold Standard

Published Thu, 07 Mar 2013 17:45:27 -0500 on Seeking Alpha

Note: In this series, I am attempting to describe the fundamental relationship between yields and inflation. Commodity prices have been highly correlated with equity yields for the last 140 years (inversely correlated with PE ratios), and there is every indication that they were correlated with the rate of profit during the 140 years prior to that. ("GYCPI" is the Grilli-Yang Commodity Price Index. Sources: For a comprehensive list of sources used in this article, please refer to my previous article.) Under the dollar standard, all goods prices, including commodities, have been relatively suppressed. That is, when you take into account the decay of the value of the dollar, you will find that goods prices of nearly all varieties have been in a state of decline since Bretton Woods. Even taking into account the incredible commodity bull market of the last decade, this is still... Read more