The rising dollar is a signal to sell gold and stocks

One trading rule that has held sway for much of 2009 is that a weak dollar is good for corporate profits and commodities like gold and oil. And for much of this year, with the record levels of U.S. borrowing, traders bet that the dollar would keep getting weaker.

But with November's better-than-expected employment report, traders are now thinking about reversing those positions. Gold has tumbled in the last few trading sessions, falling $26, or 2.22%, to $1,143.50 an ounce early Monday according to CNNMoney. (As of 4 p.m. Monday, it had bounced back a bit, to $1,155.10.) Meanwhile, the dollar hit a five-week high against a basket of currencies Monday and also rose against the euro. Since gold is often thought of as a hedge against an inflation-led economic meltdown, it may be time for gold bugs to lighten up, as I have hinted.