Greg Silberman reveals the results of some interesting research:
1. Since 2003, if the dollar falls, all other asset classes rise; and conversely, if the dollar rises, the rest drops.
2. The "real" (adjusted for the price of gold) interest rate on 3-month Treasury bills predicts movements in the exchange rate of the dollar a year later.
Since the "real" interest rate has fallen sharply, he therefore expects a strengthening in other assets next year.
Modestly, Silberman adds, "Correlations are never perfect and tend to fail just when you need them most."
I think he's right there. To me, there seems to be a lot of jiggery-pokery in the gold market (speculators vs. central banks), and the predominance of "fiduciary money" (credit) in the economy means that we're measuring sizes with elastic bands.
In times of stress, the normal predictors don't hold, so currently I view all investments as speculative. My first priority is to reduce my vulnerability with respect to creditors, and my second is building cash to take advantage of emerging opportunities.