US Equities fall against Gold. How about Nikkei?
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What would you hold, the S&P 500 or Gold? The S&P has appreciated 43.6% since Q1-2004, from near 905 to 1300. However, it has fallen sharply against Gold since Nov-Dec 2005, and is currently trading below the 2003 Low of 2.25, as seen in the chart alongside.
US equities are losing value against other investments. Thus, the Wealth Effect, if any, in US equities could be just that - only an "effect" and no more.
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The Nikkei, on the other hand, might be keeping pace with Gold. It has been rising exceptionally well since Mar-2003 and seems to be in the process of breaking through a long-term Trend Resistance coming down from May-96.
Curiously, the Yen remains at 117.50 through all this, and not at 110 or 105.
But then, which country in the world (apart from USA), wants a strong currency?
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