I would like to share with you some thoughts (today 1/26/10).
The summary I wrote last summer looks on target. No change.
Gold, Platinum are both higher.
Stocks relative to gold are lower.
However, I am beginning to suspect the S&P 500 will be far weaker in dollar terms than any reasonable person would expect.
Maybe 400?
In gold terms I expect the S&P to possibly trade at 0.1 x gold, at least as low as 0.25 x gold.

The likely crash in nominal asset prices will precede the monetary inflation people hope will buoy stocks and real estate.
Iceland's crisis may be the path others must take.
Icelandic stocks collapsed and the Icelandic currency too.
Valuations in the US S&P500 are off the charts.

The Japanese situation is very dire and the BOJ may print the Yen into oblivion.
The Euro zone was not made for times like these, and European stocks and bonds will suffer, too.
Final targets in the $US gold price are impossible to guess.
It is a relative answer.
Gold relative to each asset.

The issue facing the markets is Freedom or Socialism.
Every Nation is running towards the State and the crippled economy it can only provide.
The Welfare/Warfare State must be transformed and remove itself from the economy.
If not, inflation and extremely weak economies will persist.
Without the State involvement in the Economy, capital would appear and growth would return very fast.
The US Economy in the 1970s was a dream compared to what exists today.

The other issue is that next year US funded debt will be $14.3 Trillion.
At the interest rates of 1970s, interest alone is at least $1.5 Trillion.
That is US$20,000 per family of four.
The Fed can not allow rates to get away on the upside, or the whole 200 year reign is over.
Therein lies the problem, Congress will not cut spending and the Fed will have to monetize.
The outcome will drive asset prices.
Leaving gold too early in the collapse would be the biggest mistake.
Inflations are at there worst at the bitter end.
One could lose 90% in the last month of a hyperinflation.
Political exit from the Economy must precede the turn.
They are all Marxist now, they just don't know it.

And here is Jeff Fisher's comment from 17th January:

Based on long term charts and historic dividend yields the SP500 will once again yield at least 4.5%.
Today the payout is about $22 for the SP500.
That puts yields at about 1.9%.

A 4.5% yield would put the SP500 at 515.
The next move for stocks is down, irrespective of a falling dollar.
How long can the levitation last?
Watch dividends, if they fail to rise, stocks are going much lower.

David Fuller's view Veteran subscribers will recall seeing our charts of the S&P 500 Index divided by the price of Gold and especially the Dow/Gold Ratio which we have featured since the top formation became obvious in 2001, as gold bullion was bottoming out. Both are still trending downwards in a consistent fashion, despite gold's periodic corrections and the Dow's 2003-2007 bull run, and also last year's gains. Jeff's minimum target would take the S&P 500/Gold Ratio back to the region of the 1980 low. As then, I believe this would require a similar degree of gold fever which we have not yet experienced in the current secular bull market for bullion.

Regarding comparisons with Iceland when discussing Jeff Fisher's outlook with Eoin earlier today, he made the important point that the USA is not the economic equivalent of Iceland or Zimbabwe. Instead, it is still the world's largest economy and the USD remains the world's leading reserve currency.

History also shows us that debt problems addressed by massive reflations, as we have seen in the USA, UK and some other countries, are usually followed by a sovereign debt crisis, as we have seen with Greece recently.

Regarding Jeff's comment that "the BOJ may print the Yen into oblivion", I maintain that Japan needs a weaker yen, which we do not yet see on this chart of the Yen Trade Weighted Index, of which the US dollar and renminbi have the biggest weightings, followed by the euro.

Jeff's concern over S&P 500 valuations is shared by many of us and we need to see strong earnings growth in 2010 and beyond to improve the situation. This is possible, but certainly not a given in my view. Historically, my recollection is that significantly higher dividends are achieved less frequently by market collapses which are generally triggered by economic crises, resulting in dividend cuts as we last saw in 2008 and early 2009. However 1987 was an exception as that dramatic event did not trigger the global recession / depression widely feared at the time.

The highest S&P 500 dividend yield since the 1930s and 1940s was 6.21%, achieved in 2Q 1982. This marked the end of the secular bear in yields, which were only able to rise to those levels because US GDP had continued to grow at a reasonable rate against the background of a mostly ranging stock market.

Lastly, the S&P 500 bottomed at 666 last March. I am on record for saying that I do not think it can move meaningfully above the 2000 and 2007 peaks for a very long time, because of the valuations problem. However, the figure of 515 for the S&P if today's dividend yield were to theoretically rise to 4.5% without any further dividend increases, seems equally unlikely to me, at least while interest rates remain low.