Stocks Beat Bonds, Gold, BBH Strategist Says

Many "experts," and I use that term loosely, clearly do not understand the forces that govern secular trends. The uniform motion (or lack thereof) of the secular trend remains unperturbed unless compelled to change by external force. Until that external force materializes, the direction of the secular trend remains down.

Unfortunately, the brilliance of Newton did not always apply to the monetary and financial markets.

Silver was the basis of Britain's monetary system for hundreds of years. This is why their currency is still called the Pound Sterling.

The price or exchange value of gold and silver coins fluctuated relative to supply and demand until 1717 when Sir Isaac Newton, the Master of the Royal Mint, introduced a bimetallic currency system based on silver and gold. Newton fixed exchange ratio at 15.5:1. In other words, gold was considered to be 15.5 more valuable than silver.

Variation in supply and demand factors for gold and silver, however, created distortions within the fixed exchange. Silver was considered more valuable than gold by the markets, and Gresham's law - driving out good for bad money, slowly removed it from circulation.

The key to any monetary system, as Jim has suggested, is flexibility.

U.S. Large Cap Stocks Capital Appreciation Index (LCSCAI); S&P 500 to Gold Ratio:

Bonds are overvalued and gold is no protection from inflation, says Scott Clemons, chief investment strategist at Brown Brothers Harriman and contributor to the BBH Core Select Fund.

Source: finance.yahoo.com