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Just read an interesting article about inflation. I am a technician and
don't base my trades on anything other then technical information, but
an understanding of what is going on around you always helps one in
their long term projections. The basis of the article was the
relationship of real wage gains versus productivity gains. It showed a
direct relationship between the two and inflation and market direction.
During every bull market real pay gain is less then the gain in
productivity. when real pay gains exceed the gain in productivity then
prices rise, margins dwindle and stocks go down in price. Based upon
this, the article shows that we are currently in a position where wages
are increasing at a 3 1/2% rate and Productivity is increasing at a 2
1/4% rate. The conclusion is that the bear will remain for a while.
could the rally in gold stocks be indicating this also? If inflation is
on the rise then can interest rates be far behind? Ira
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