A wave of money is driving up a broad spectrum of asset prices that normally do not rise simultaneously, an anomaly partly due to lower bond yields and a lower dollar, the Wall Street Journal reports. The major U.S. stock market indices, notably the S&P 500 Index (SPX), the Dow Jones Industrial Average (DJIA) and the Nasdaq Composite Index, have reached record highs this month, but bond prices, which normally would be declining in similar circumstances, also are on the upswing. 

While equity market bulls are betting on continued U.S. economic expansion, bond market investors are cheered by lowered inflation readings, which normally are associated with economic slowdowns, the Journal observes. The yield on the 10-Year U.S. Treasury Note hit a year-to-date low on Tuesday. Meanwhile, the lower dollar is spurring U.S. exports and increasing the dollar value of profits earned abroad by U.S. companies. (For more, see also: Fed Rate Hike Bets Are Slashed on Weaker Economy.)

Gold Also Rises

Investors normally turn to gold either as a hedge against inflation or as a safe haven in times of economic and political turmoil. While inflation is currently muted in the U.S., recent terrorist attacks in London and elsewhere, as well as the controversies and uncertainties swirling about President Trump, are pushing up the price of gold, the Journal says.

Spot gold closed Wednesday at $1,287.15 per ounce, up 13.7% from its close of $1,132.35 on December 20, according to data compiled by Bloomberg. Two of the gold ETFs that track the spot price and have had similar gains, less expenses and liabilities, are the SPDR​ Gold Trust (GLD) and the iShares​ Gold Trust (IAU). 

Among gold mining stocks, Exeter Resource Corp. (XRA) has soared an eye-popping 145.8% during this time frame, propelled by an acquisition bid from Goldcorp Inc. (GG). Meanwhile, Kinross Gold Corp. (KGC) has risen 53.1%, based largely on earnings beating estimates. (For more, see also: Top 5 Gold ETFs for 2017.



Bitcoin Bubble?

The price of cryptocurrency​ bitcoin​ has rocketed in value from $967.60 on December 31 to $2,712.76 on June 7, for a gain of 180%, according to Bitcoin.com. Jeffrey Dorfman, an economics professor at the University of Georgia, is among those who find that bitcoin is really a speculative asset, rather than a "plausible currency," per cryptocoinsnews.com. Nobel laureate in economics Robert Shiller, who teaches at Yale University, called bitcoin "an amazing example of a bubble" back in 2014, says Forbes magazine columnist John Wasik, who shares this opinion.

Goldilocks Environment

As money manager John Stopford at Investec Asset Management told the Journal, there is "a goldilocks environment right now for the markets: reasonable growth, benign inflation and highly accommodative central bank policy." How likely this will continue is anyone's guess, but it certainly won't persist forever. (For more, see also: Bill Gross: QE is "Financial Methadone.")

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