“If the practice of covering government deficits with the issue of notes, then the day will come without fail, sooner or later, when the monetary systems of those nations pursuing this course will break down completely. The purchasing power of the monetary unit will decline more and more, until finally it disappears completely.”
The above chart shows the performance of the Dow in real money – gold ounces. The chart shows that an investment in the Dow has shown no real return, before inflation, in gold ounces since 1990. An investment of about 44 ounces at the Dow peak would now only return about 8 ounces – an 81% loss.
Tampa Gold says:
While millions of ‘value investors’ double down, I whistle past the graveyard.
Fuck all of those soon to be broke ass zombees. (zombees is NOT on the DuHS hit list.)
Tick- Tock……..get moving folks!
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6th June 2012 at 2:27 pm
Kill Bill says:
So the dollar has lost 96% of its value compared to golds 81%
Were number one!
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6th June 2012 at 3:01 pm
Administrator says:
Wrong KB
The Dow lost 81% versus gold since 2000.
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6th June 2012 at 3:17 pm
Bob says:
For those who follow or want to learn more about technical analysis of price trends, The chart above shows a long-standing downward trend that is due, after an 81% move in one direction, for what technical analysts call a correction. A correction is a compensating move against the main trend that is both a reaction and a relief of the forces that have built up during the trend.
To greatly over-simplify things, corrections usually retrace between 1/3 and 2/3s of the price change that was experienced during the main trend. The most simple way to understand whether a trend has changed is to observe whether a new price extreme is experienced in the other direction. Most technical analysts will trell you that this is too late to be of much practical value — they look at the 2/3s retracement as a proxy for trend change.
Since Dow/Gold is a ratio, there can be changes in either the Dow price, the Gold price, or both that could affect the ratio. As the chart indicates, the ration has been as high as 45 during the current trend, and as low as approximately 6. so 45 – 6 = 39. 39 – 1/3 (13) = 26; 39 – 2/3 (26) = 13.
So if the trend in the Dow/Gold ratio is undergoing a correction, it is likely to rise to between 13 and 26 before resuming its downward move.
Some possible combinations at a ratio of 13 include:
Dow 24,000, Gold 1,846
Dow 21,000, Gold 1,615
Dow 18,000, Gold 1,385
Dow 15,000, Gold 1,154
Dow 12,000, Gold 923
Dow 10,000, Gold 769
Dow 8,000, Gold 615
Dow 6,000, Gold 461
Dow 4,000, Gold 308
Some possible combinations at a ratio of 26 include:
Dow 21,000, Gold 808
Dow 15,000, Gold 577
Dow 10,000, Gold 385
Dow 6,000, Gold 231
Like any other technical analyst, I will bring to bear all the knowledge and experience I can to decide which of these scenarios seem to be most plausible. From these tables, it appears that the Dow/Gold ratio will probably not correct much more than the 1/3 retracement level, though it could get to the 50% mark.
The key takeaway is that the price of Gold in particular has been in a sharp uptrend for an extended period of time, and is due for a pullback. The same can be said to a lesser extent for the Dow. I believe that the long uptrends in Gold prices and inflation will both crash together in a monolithic deflation — I hope I’m wrong. But the Dow/Gold ratio points in that direction…
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6th June 2012 at 3:18 pm
Bob says:
Pleasenote in the above comment that the calculation is conservative — I did not add the bottom number (6) into the equation.
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6th June 2012 at 3:26 pm
TeresaE says:
Tampa, while I greatly admire your message – and spirit – the problem with “Fuck all of those soon to be broke ass zombees” is that they won’t just drop dead or disappear.
It won’t take them long, or much effort, to see whom has stuff left in their homes, then they come for us. The public employee zombees have been stripping small business for nearly 15 years now. They apparently are unable to see the empty stores, factories and offices because even while the closures ramp up, the perks, benes, pay packages and the like ramped up too. Once the small biz tax base is completely obliterated, then the homeowners will be up.
Meanwhile, even though the FBI claims crime is down, the news reports and scanners aren’t telling the same story.
My neighborhood was hit last night. In the middle of the night somebody went garage to garage, cutting locks and stealing lawn mowers, generators and expensive tools.
Our neighborhood is upper working class, we are located one block from city hall and less than a mile from the main police station.
Zombee Apocalypse is underway. Murder/suicide seems to be trending up. Suicides are way up. Crime is increasing everywhere and people are becoming more brutal towards each other.
What a perfect recovery, what a perfect job our leaders have done.
We are perfectly FUBAR.
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6th June 2012 at 3:46 pm
Kill Bill says:
Yeh, okay, the dollars value is down 96% since the Feds creation [1913 or so]
In 2000 rubber dog crap cost a dollar. Today that same rubber dog crap would cost one dollar and thirty fours cents.
Amazing idnit? all that cheap ass labor over in China and it costs me more to buy my monthly supply of rubber dog shit.
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6th June 2012 at 4:10 pm
Muck About says:
You have two ways to read that chart. Gold is either greatly overpriced or the DOW is hugely underpriced,
Piling debt upon debt will certainly not make the DOW go up..
Wether gold will lose relative value when the economy and the nominal DOW cracks and falls down in a cloud of broken derivatives, bankrupt banks and the death of debt or shoots skyward if TPTB elect to inflate before dying is totally immaterial.
Gold is an asset in any event. A dollar is a debt and totally fiat, backed by no assets at all other than more debt. I’d rather hold an real asset in times of crises than debt backed by thin air..
MA
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6th June 2012 at 5:40 pm
Novista says:
What’s the technical analysis of the price of gold after Doomocalypse?
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6th June 2012 at 11:44 pm
Bob says:
Muck and Novista, the conclusion i’ve reached is that for however long the period is that economic transactions remain denominated in dollars, the dollar price of Gold is in for a big fall. So is the dollar price of the DOW. Muck, if deflation does not happen, and we get hyperinflation instead, the price of the Dow in dollars will most likely soar along with the price of Gold.
IF Gold becomes the preferred medium of exchange at some point in the unraveling, its value will most likely soar, but in something other than dollar terms. However, I believe we are just as likely to get a new replacement fiat currency rather than a Gold Standard. Look at Greece, which is spiraling down into depression. They are not considering replacing the Euro with Gold – they are talking about bringing back the Drachma, in part because it can depreciate and help make Greece more competive from a lower economic level.
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6th June 2012 at 11:33 am