It is traditionally said that when the U.S. dollar drops, gold rises. My opinion, do your own DD though, is that the dollar will likely continue to rise, but gold will rise as well with the massive stimulus, etc. You must note that global debt is denominated in U.S. dollars. Global debt is massive, and it is a huge problem. The U.S. dollar is in demand because global debt is repaid in U.S. dollars at a time that currencies worldwide are devalued in terms of dollars. With world currencies weakening, gold is in demand, and gold is holding up well as Bigworid points out.
Bigwoid also points out that stocks may decline further. I think that is highly likely. The U.S. is a debtor nation. It is very much unlike Japan, which is creditor nation. When U.S. dollars are needed foreigners will also be selling U.S. securities as needed.
U.S. is a debtor nation - Foreigners own more U.S. assets than we own foreign assets. This matters because foreigners have two ways to get dollars when they really need them. They can participate in international trade, or they can sell their U.S. dollar-denominated assets. In healthy markets, they choose the first option - international trade. However, during a global recession, that trade disappears. Therefore, when dollar debts need to be paid, they are will need to sell U.S. assets for dollars.
There are other reasons why U.S. securities will continue to be in trouble even though you see “false rallies”.
An important factor is you can kiss buy backs goodbye, and corporate buy backs were the big factor in the stock market rise up until now.
Added to this situation is the massive global debt, the global pandemic, and an oil war between the Saudi's and Russia, two of the worlds biggest oil producers. However, the oil problem may be remedied for now depending on the meeting this Thursday. Reportedly, Russia and Saudi are close to a deal...
We shall see.
