So, a reader asked me about the S&P 500 in terms of price to earnings. Current True Dollars™ P/E is 18.5% above the long-run True Dollars average of $17.50. Current True Dollars P/E is up 59.9% since hitting the September 2011 low of $13.01.
Read more ...
Thursday, May 28, 2015
Tuesday, May 5, 2015
S&P 500 STILL NO WHERE NEAR ALL-TIME HIGH. CASH ACCRETION AND RHETORIC DECEIVES MANY.
In spite of the cringe-worthy stupidity that gets parroted by those working in financial news media of U.S. stocks near all-time highs, after removing the effects of inflation, stocks are no where near all-time highs.
Reality:
Fantasy:
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If only almost all would stop with their silliness and begin to think, they would being to question how can stocks be at all-time highs if Congress-provided food welfare, SNAP (aka, food stamps) stays near all-time highs (SEE: YELLEN. THE FED, THE LIES, THE FAKE RECOVERY. 46 MILLION NEEDY AMERICANS STILL NEED FOOD STAMPS).
True record stock markets indexes would reflect an economy firing on all cylinders, with everyone who wants a job having one, with few needing Congress-provided welfare.
Since the S&P true crash at February 1, 2009, the collusion between those at the Federal Reserve and those of the U.S. Congress have managed to bleed into circulation 1.53 times the sum of cash in circulation at the crash. Said another way, there are 53% more dollars in circulation today (as of March 1, 2015) than there were on February 1, 2009.
So unless Americans massively increased their output of electricity, food, gasoline, clothing, steel, movie tickets and so on, no one should believe in any of the rhetoric about a growing economy or all-time highs stocks.
Growing up, never would I have believed that most adults could be as stupid as they are while some adults know no boundaries when it comes to being deceitful.
Read more ...
Reality:
Fantasy:
If only almost all would stop with their silliness and begin to think, they would being to question how can stocks be at all-time highs if Congress-provided food welfare, SNAP (aka, food stamps) stays near all-time highs (SEE: YELLEN. THE FED, THE LIES, THE FAKE RECOVERY. 46 MILLION NEEDY AMERICANS STILL NEED FOOD STAMPS).
True record stock markets indexes would reflect an economy firing on all cylinders, with everyone who wants a job having one, with few needing Congress-provided welfare.
Since the S&P true crash at February 1, 2009, the collusion between those at the Federal Reserve and those of the U.S. Congress have managed to bleed into circulation 1.53 times the sum of cash in circulation at the crash. Said another way, there are 53% more dollars in circulation today (as of March 1, 2015) than there were on February 1, 2009.
So unless Americans massively increased their output of electricity, food, gasoline, clothing, steel, movie tickets and so on, no one should believe in any of the rhetoric about a growing economy or all-time highs stocks.
Growing up, never would I have believed that most adults could be as stupid as they are while some adults know no boundaries when it comes to being deceitful.
Thursday, April 2, 2015
AMERICAN CORPORATE PROFITS STILL IN DECLINE AND STILL TOO HIGH. SEE THE TRUE PICTURE.
Many continue to tout what ought to be considered a smoke-and-mirrors, propaganda recovery for the American economy.
Today, I give you the true picture of corporate profits. First, this is the picture the Federal Reserve gives you. They report corporate profits in dollars.
And now, I give you the true picture. This is what corporate profits look like after deflating.
Anyone whose been living their adulthood years since the 1990s knows this picture corresponds to their reality while the Fed Res dollars picture tells nothing. Likewise, those were in their primes between 1960 and 1970 knows the truth of my picture. The same holds true for those who were in their primes in the 1980s.
To be sure, whenever True Corporate Profits have been rising, Americans have lived better. This aspect of reality contradicts the false preaching of socialism revivalists like Thomas Piketty.
All-time peak True Corporate Profits hit Q2 2006, leading True Peak GDP and True Peak Credit, which Q4 2007.
It looks like True Corporate Profits are following the trajectory of True GDP though not the rate of decline. Corporate profits are still too high relative to the long run True Average of US$88.60 billion, 1.63 times higher than that average.
So how well does True S&P 500 correspond True Corporate Profits and GDP? Keep in mind that in any year for awhile now, about 45% of revenues for the S&P 500 firms get earned outside the USA.
As it is, a couple of weeks back, I showed you the true picture on SNAP in YELLEN. THE FED, THE LIES, THE FAKE RECOVERY. 46 MILLION NEEDY AMERICANS STILL NEED FOOD STAMPS. How can anyone believe there ever has been a recovery after the collapse of the Greenspan-Bernanke Inflation Bubble, the largest credit bubble in the history of mankind?
Read more ...
Today, I give you the true picture of corporate profits. First, this is the picture the Federal Reserve gives you. They report corporate profits in dollars.
And now, I give you the true picture. This is what corporate profits look like after deflating.
Anyone whose been living their adulthood years since the 1990s knows this picture corresponds to their reality while the Fed Res dollars picture tells nothing. Likewise, those were in their primes between 1960 and 1970 knows the truth of my picture. The same holds true for those who were in their primes in the 1980s.
To be sure, whenever True Corporate Profits have been rising, Americans have lived better. This aspect of reality contradicts the false preaching of socialism revivalists like Thomas Piketty.
All-time peak True Corporate Profits hit Q2 2006, leading True Peak GDP and True Peak Credit, which Q4 2007.
It looks like True Corporate Profits are following the trajectory of True GDP though not the rate of decline. Corporate profits are still too high relative to the long run True Average of US$88.60 billion, 1.63 times higher than that average.
So how well does True S&P 500 correspond True Corporate Profits and GDP? Keep in mind that in any year for awhile now, about 45% of revenues for the S&P 500 firms get earned outside the USA.
As it is, a couple of weeks back, I showed you the true picture on SNAP in YELLEN. THE FED, THE LIES, THE FAKE RECOVERY. 46 MILLION NEEDY AMERICANS STILL NEED FOOD STAMPS. How can anyone believe there ever has been a recovery after the collapse of the Greenspan-Bernanke Inflation Bubble, the largest credit bubble in the history of mankind?
Thursday, December 11, 2014
AFTER THE GOLD RUSH. YELLOW BRICK ROAD FINAL DESTINATION. FOOL'S GOLD VS THE S&P 500
This work is Part 3 on the Gold-to-Silver ratio and the Gold to whatever else ratio.
Here is the one graph many want to see.
Right now, hardly does it take any of a share of the S&P 500 to buy an ounce of gold.
Gold is so done. There are no drivers for gold.
Anyone who has bought gold since the end of Q3 2011 has lost buying power, that is three years running. Gold is a horrible speculation today. Since hitting a peak at Q3 2011, True Gold (discounting for inflation) has fallen -43.3%, falling at a yearly rate of -16.0%.
In the long bull run between Q3 1974 and Q3 2000, True S&P 500 grew at a yearly rate of 7%, growing a full 484.3%.
In the long gold run from a Q3 1976 to Q3 2011, True Gold grew at less than 1% a year, coming in at a scant 0.5% a year for a total of 19.6%, from $87.11 to $104.18. In the same period, True S&P 500 grew almost 4 times as fast, albeit at 1.8% a year for a total of 95%, from $78.12 to $152.33.
Easily then, compared to gold, even with the crash of 1987 and the following bear that ended in Q1 1988 (-32.2% annual decline), and the much longer bear markets of 2000-2002 (-21.7% annual decline) and 2007-2009 (-35.9%), stocks were still a much better deal than gold over the period 1976 to today.
The 2000s gold rush has brought out every gold bug who at long last felt vindicated for all of their ranting against financial asset-backed cash vs their favored gold-backed cash. That rush is over and has been three years.
Today. Bloomberg quoted spot gold at US$1,226.85, but in true terms, erasing the effects of inflation, True Gold (gold discounting for inflation) traded 15.3% below its long run average price, an average price billowed by the huge spike that happened between Q3 1976 and Q1 1986. Removing spikes from the average, and today, True Gold closed 2.5% below what likely is the long-run normal average for True Gold.
Those who take to the Internet proclaiming to be bullish on gold and encouraging others to buy gold should get forced to give answers.
- What are the drivers for gold?
- Where is all the buying power coming in to buy gold?
- Where are the latest winning bidders outbidding the previous ones pushing up prices?
Worldwide, the primary purchase and use of gold is jewelry. At least four times as much gold goes into jewelry as it does into rounds.
- How are economies everywhere?
- Are true incomes growing so there are more jewelry buyers with more buying power?
Wednesday, July 9, 2014
IS THERE EVER REASON TO BUY GOLD?
The Internet attracts all kinds of crazies, doomsayers and hucksters. Sometimes the Internet attracts doomsaying hucksters. Among those are the gold bugs.
Gold bugs shall tell you there is no better time to buy gold. Then they shall tell story after story saying the apocalypse is nigh.
Many of them earn their living brokering gold. The more they can cajole others to buy, the higher the price for gold. The higher the price, the more commission they earn from the same percent.
Buying gold is speculating long on price. It's not investing.
Investing means buying an income stream. Speculating means betting on price changes.
Anyone who tells you that you can invest in gold either is clueless or is lying. Never is there an income stream from gold.
Since going long gold is speculating, what counts is how much stuff you can buy when you sell gold should you own any. What you want to know is how many gallons of gasoline can you buy in future or how many airline tickets or how many back massages and so on.
Anyone who has bought gold since the end of Q3 2011 has lost buying power, that is three years running. Gold is a horrible speculation play today.
Anyone who would have bought gold after Q3 1980 until Q1 2001 would have taken a bath, with the first washing done from Q3 1980 until Q2 1986. After a head fake through Q4 1987, gold buyers continued to lose buying power every year until the end of Q1 2001.
Sure, if someone caught the wave of gold starting Q1 2001 to Q3 2011, that one lucked out. True gold, that is gold priced in gold window dollars, the only authentic inflation deflator, went from a low of $51.94 to a peak of $172.05. Gold grew at a yearly rate of 11.8%, growing a whopping 231.2% from low to peak.
In that time, True S&P 500 fell at a yearly rate of -5.8%, falling a painful -47.7%.
Yet, had someone bought the True S&P 500 at $86.50 at the end of Q1 1994 and rode that until Q3 2000, that lucky one would have enjoyed a yearly growth of 22.3%, double the return of the great gold rush of the 2000s, with the total growth coming in at 251.4%.
In the long bull run between Q3 1974 and Q3 2000, True S&P 500 grew at a yearly rate of 7%, growing a full 484.3%.
In the long gold run from a Q3 1976 to Q3 2011, True Gold grew at less than 1% a year, coming in at a scant 0.5% a year for a total of 19.6%, from $87.11 to $104.18. In the same period, True S&P 500 grew almost 4 times as fast, albeit at 1.8% a year for a total of 95%, from $78.12 to $152.33.
Easily then, compared to gold, even with the crash of 1987 and the following bear that ended in q1 1988 (-32.2% annual decline), and the much longer bear markets of 2000-2002 (-21.7% annual decline) and 2007-2009 (-35.9%), stocks were still a much better deal over the period 1976 to today.
As I show in LOSING ITS LUSTER. THE SECRET FUTURE OF GOLD REVEALED, gold trades in ratio to true prime rate. Current gold already has priced in what true prime should look like absent interest rate suppression by your friendly Fed Res central bankers.
In S&P 500 VS GOLD, I show the true price of gold and the true price of the S&P 500. As politicians long ago demonetized gold, gold pricing works the same as any other commodity, adhering to the forces of the Law of Prices — the winning bids of purchase and sale in the face of what is on offer set the price — and the Axiom of Profit — the sum of sales set on winning bids must at least equal the cost of production, otherwise the producer goes to ruin.
The days are long past when faced with inflation — too much bank credit circulating beyond trade needs — pushed anyone to ship their gold to other countries with bankers who offered higher interest rates.
The 2000s gold rush has brought out every gold bug who at long last felt vindicated for all of their ranting against financial asset-backed cash vs their favored gold-backed cash. That rush is over and has been three years. All of the doom and gloomers lack facts of reality as you now have them. For if they had them, long ago would they have shut up about gold.
And if you stopped and then started to think about it, that should be so. Mankind gets ever smarter and more efficient at organizing matter and energy into property that ever more desire. Efficiency with respect to gold mining and possession is much harder to gain.
Likely, no one is going to see another gold run as we have seen for another 25 years. The big run up in gold mostly came with the big credit expansion and bubble. Gold then went higher when uncertainty grew.
No one on earth is going to see another big run in gold like the run between 2001 and 2011 unless another credit expansion happens at an alike rate of 7.1% a year. Normal true credit growth from low to high runs at 2.5% a year.
The 2000s gold rush has brought out every gold bug who at long last felt vindicated for all of their ranting against financial asset-backed cash vs their favored gold-backed cash. That rush is over and has been three years.
Read more ...
Gold bugs shall tell you there is no better time to buy gold. Then they shall tell story after story saying the apocalypse is nigh.
Many of them earn their living brokering gold. The more they can cajole others to buy, the higher the price for gold. The higher the price, the more commission they earn from the same percent.
Buying gold is speculating long on price. It's not investing.
Investing means buying an income stream. Speculating means betting on price changes.
Anyone who tells you that you can invest in gold either is clueless or is lying. Never is there an income stream from gold.
Anyone who has bought gold since the end of Q3 2011 has lost buying power, that is three years running. Gold is a horrible speculation play today.
Anyone who would have bought gold after Q3 1980 until Q1 2001 would have taken a bath, with the first washing done from Q3 1980 until Q2 1986. After a head fake through Q4 1987, gold buyers continued to lose buying power every year until the end of Q1 2001.
Sure, if someone caught the wave of gold starting Q1 2001 to Q3 2011, that one lucked out. True gold, that is gold priced in gold window dollars, the only authentic inflation deflator, went from a low of $51.94 to a peak of $172.05. Gold grew at a yearly rate of 11.8%, growing a whopping 231.2% from low to peak.
In that time, True S&P 500 fell at a yearly rate of -5.8%, falling a painful -47.7%.
Yet, had someone bought the True S&P 500 at $86.50 at the end of Q1 1994 and rode that until Q3 2000, that lucky one would have enjoyed a yearly growth of 22.3%, double the return of the great gold rush of the 2000s, with the total growth coming in at 251.4%.
In the long bull run between Q3 1974 and Q3 2000, True S&P 500 grew at a yearly rate of 7%, growing a full 484.3%.
In the long gold run from a Q3 1976 to Q3 2011, True Gold grew at less than 1% a year, coming in at a scant 0.5% a year for a total of 19.6%, from $87.11 to $104.18. In the same period, True S&P 500 grew almost 4 times as fast, albeit at 1.8% a year for a total of 95%, from $78.12 to $152.33.
Easily then, compared to gold, even with the crash of 1987 and the following bear that ended in q1 1988 (-32.2% annual decline), and the much longer bear markets of 2000-2002 (-21.7% annual decline) and 2007-2009 (-35.9%), stocks were still a much better deal over the period 1976 to today.
As I show in LOSING ITS LUSTER. THE SECRET FUTURE OF GOLD REVEALED, gold trades in ratio to true prime rate. Current gold already has priced in what true prime should look like absent interest rate suppression by your friendly Fed Res central bankers.
In S&P 500 VS GOLD, I show the true price of gold and the true price of the S&P 500. As politicians long ago demonetized gold, gold pricing works the same as any other commodity, adhering to the forces of the Law of Prices — the winning bids of purchase and sale in the face of what is on offer set the price — and the Axiom of Profit — the sum of sales set on winning bids must at least equal the cost of production, otherwise the producer goes to ruin.
The days are long past when faced with inflation — too much bank credit circulating beyond trade needs — pushed anyone to ship their gold to other countries with bankers who offered higher interest rates.
The 2000s gold rush has brought out every gold bug who at long last felt vindicated for all of their ranting against financial asset-backed cash vs their favored gold-backed cash. That rush is over and has been three years. All of the doom and gloomers lack facts of reality as you now have them. For if they had them, long ago would they have shut up about gold.
And if you stopped and then started to think about it, that should be so. Mankind gets ever smarter and more efficient at organizing matter and energy into property that ever more desire. Efficiency with respect to gold mining and possession is much harder to gain.
Likely, no one is going to see another gold run as we have seen for another 25 years. The big run up in gold mostly came with the big credit expansion and bubble. Gold then went higher when uncertainty grew.
No one on earth is going to see another big run in gold like the run between 2001 and 2011 unless another credit expansion happens at an alike rate of 7.1% a year. Normal true credit growth from low to high runs at 2.5% a year.
The 2000s gold rush has brought out every gold bug who at long last felt vindicated for all of their ranting against financial asset-backed cash vs their favored gold-backed cash. That rush is over and has been three years.
Friday, June 20, 2014
S&P 500 AND THE DOW JONES INDUSTRIAL AVERAGE HIT ALL-TIME LIES!
It's another Friday and media propagandists everywhere have told yet another record lie.
Countless teleprompter readers and countless keyboard jockeys are singing the praises of record dollar closes in the S&P 500 and the Dow Jones Industrial Average.
In actual buying power, which is what counts, both the True S&P 500 and the DJIA are off all-time highs, way off. The True S&P 500 hit an all-time high way back on August 28, 2000, when the S&P closed at $313.35 in True Dollars™.
In reality, the True S&P 500 hit the all-time high a whopping 5,045 days ago! Said another way, that is 13 years, nine months and 24 days ago, or roughly 720 weeks ago since anyone can claim rightfully any talk about all-time highs.
Today, the True S&P 500 closed at $160.18, or 51.1% of its all-time high. From the August 28, 2000, peak to the March 3, 2009, low, the S&P 500 fell a whopping -69.1%, falling at an annual rate of -12.8%.
From the March 3, 2009, True Dollar™ low of $96.82 until now, the True S&P 500 has risen 65.4%, growing at an annual rate of 9.9%. That annual growth seems impressive until one discovers that $1.317 trillion dollars worth of cash and deposits have been created by Federal Reserve bankers through monetizing of new debt incurred by the U.S. Congress on behalf of taxpayers now and long into the future. Said another way, Fed Res bankers have overseen an eye-popping 93.5% growth in cash and deposits since the March 2009 low.
In the 20 years between January 6, 1975, and December 5, 1994, total cash and deposits grew 308.6%, growing at an annual rate of 7.3%. During that time, the True S&P 500 grew 50.7% growing at an annual rate of 2.0%.
Between December 5, 1994, and the all-time high hit on August 28, 2000, the True S&P 500 grew 261.9% growing at a blistering rate of 25% a year. Likely surprising to many, over those 2,094 days, or 5 years, eight months and 24 days, cash and deposits fell -6%, falling at an annual rate of -1.1% and leaving cash and deposits $69.7 billion less than before the start of the run.
In, True State of the Union: Wage-Earners' Income and Taxes, I show during that 1994 and 2000 stretch, as a percent of GDP, true private wages rose. As well, true average income rose, employment incidence rose and hit an all-time peak, and true individual taxes as a percent of GDP rose, nearing the all-time high.
Buying power matters. When output rises and instruments of buying — cash and deposits — fall, living betters for most.
Denominational stock prices don't matter much. True stock prices always matter.
From December 1994 to the August 2000 all-time high, True GDP grew at an annual rate of almost 6.4%, growing a full 54.2%. From the March 2009 low until the end of Q1 2014, True GDP has fallen at the yearly rate of -9.7%, falling a full -41.5%!
It should be clear that not only does quantitative easing not work, but engaging in quantitative easing proves to be destructive. Quantitative easing harms any economy.
During the Clinton Good Times, Federal Reserve Bank Units (FRBUs) of cash and deposits fell! During the Obama Hard Times, because of the efforts of debauched, squandering Congressmen and Fed Res bankers, FRBUs have risen to recklessly.
The purpose of cash is to do the work of money, if money existed. The purpose of money is to settle contracts, specifically to extinguish debt.
As money only ever is coined metal by weight and fineness, money has not existed for most Americans since 1933. As cash is evidence of deposits circulating in perpetuity, cash cannot extinguish debt.
The purpose of credit is to bring forth production into the now on expectation of future profits.
When production of property (right of ownership) in the pursuit of profit in purchases and sales, or trade is efficient, trade betters the lives of all. In the end, anyone wants stuff as wealth. Cash acts as a stand-in, a claim against future stuff of wealth. Credit acts as a stand-in for future profit.
Making cash and credit less efficient weakens any economy. That is what Quantitative Easing does. Ben Bernanke has wrecked the U.S.A. like no enemy ever could. His successor, Janet Yellen is bent on following in Bernanke's footsteps.
Those of the Federal Reserve don't understand banking, credit, money, cash at all. Thus, they do not understand trade.
Sunday, May 25, 2014
S&P 500 MINI-MANIA HITS. 24% CORRECTION OR 42% CRASH UPCOMING?
On Friday, reporters of news media everywhere reported on the S&P 500 closing at a supposed record high on Friday, May 23, 2014. Is it true though? Did the S&P 500 close at an all-time high?
Let's have a look at the True S&P 500 after removing the effects of cash accretion.
True S&P 500 hit a high way back at the end of Q1 2000 when the S&P 500 traded at almost twice the price as it does today.
Friday's close is nearer to the end of Q4 1996.
Here is what the True Dow Jones Industrial Average looks like compared with the True S&P 500.
Now, let's look at the True S&P 500 to True GDP.
In general, the chart shows the players in stocks that constitute the S&P 500 trade fundamentals, sometimes lagging the economy and sometimes leading the economy.
A true speculative mania set in sometime between the end of Q1 1997 and the end of Q2 1997. That mania held and went higher from Q3 1998 until the peak at the end of Q1 2000.
As I recall, during the years of 1999 and 2000, the bus boys and bartenders at the local NFL Sunday sports bar chattered about stocks and what they should buy next.
After a violent crash, from the end of Q3 2002 until the end of Q1 2013, players of the S&P 500 resumed trading on beliefs close to fundamentals.
If the S&P were trading at the long-run average of true GDP to True S&P 500 ($15.65), the current price of the S&P 500 should be closer to $1,095.65. That would be a whopping crash of 42.35% from Friday's peak.
If the S&P were trading at the of true GDP to True S&P 500 from Q3 2002 low through Q3 2011 ($11.86), then the current price of the S&P 500 should be closer to $1,445.96. That means the S&P would need to fall 23.92%.
$1,445.96 sounds about right to me.
Read more ...
Let's have a look at the True S&P 500 after removing the effects of cash accretion.
True S&P 500 hit a high way back at the end of Q1 2000 when the S&P 500 traded at almost twice the price as it does today.
Friday's close is nearer to the end of Q4 1996.
Here is what the True Dow Jones Industrial Average looks like compared with the True S&P 500.
Now, let's look at the True S&P 500 to True GDP.
In general, the chart shows the players in stocks that constitute the S&P 500 trade fundamentals, sometimes lagging the economy and sometimes leading the economy.
A true speculative mania set in sometime between the end of Q1 1997 and the end of Q2 1997. That mania held and went higher from Q3 1998 until the peak at the end of Q1 2000.
As I recall, during the years of 1999 and 2000, the bus boys and bartenders at the local NFL Sunday sports bar chattered about stocks and what they should buy next.
After a violent crash, from the end of Q3 2002 until the end of Q1 2013, players of the S&P 500 resumed trading on beliefs close to fundamentals.
If the S&P were trading at the long-run average of true GDP to True S&P 500 ($15.65), the current price of the S&P 500 should be closer to $1,095.65. That would be a whopping crash of 42.35% from Friday's peak.
If the S&P were trading at the of true GDP to True S&P 500 from Q3 2002 low through Q3 2011 ($11.86), then the current price of the S&P 500 should be closer to $1,445.96. That means the S&P would need to fall 23.92%.
$1,445.96 sounds about right to me.
Friday, May 23, 2014
Wednesday, May 7, 2014
S&P 500 VS GOLD
Federal Reserve Bank Units (FRBUs), or if you like better, Federal Reserve Buying Units are what circulate goods and services in the U.S.A. and elsewhere on earth.
In ELECTRICITY PRICES. SHOCKING, ISN'T IT? THANKS, NIXON, I explain that Richard Nixon, then president of the U.S., through Executive Order 11615, closed the gold window, which put Americans on fiduciary bank credits as money system and thus the world on a floating exchange rate scheme for international trade settlement. It is these fiduciary bank credits which constitute Federal Reserve Bank Units.
What counts is buying power, that is, how much real stuff you can buy with an ounce of gold or a share of the S&P 500. Since inflation is a banking phenomenon, using a FRBUs-based deflator, we can compare the true price of the S&P 500 against the true price of gold.
Here is True S&P 500 vs True Gold in True Dollars™.
S&P 500 in GWDs vs Gold in GWDs
From Q4 1975, through Q1, 1989, an ounce of gold let you buy more than one share of the S&P 500. Between Q2 1989 and Q4 1990, speculators struggled between the two.
The True S&P 500 won that struggle by Q1 1991. Stock speculators and investors did not look back to gold for a long time.
The peak of gold bettering the S&P 500 came in Q2 of 1980 when the price ratio of one ounce of gold to one share of the S&P 500 stood at $5.56.
From April 1, 1991, through January 1, 2009, one share of the S&P 500 let you buy more than an ounce of gold. The peak of S&P 500 bettering the gold came in Q1 of 2000 when the price ratio of one share of the S&P 500 to one ounce of gold stood at $0.18.
During the Greenspan-Bernanke Credit Bubble, the largest credit bubble in history, the average price ratio of one share of the S&P 500 to one ounce of gold stood at $0.41.
Between Q3 2011 and Q3 2012, investors and speculators once again fought between gold and the S&P 500. Twice in that period, gold bested the S&P 500.
Since Q4 2012, the S&P 500 has been pulling away from gold. In the two years, True Gold has fallen -35.4% falling at a yearly rate of -19.6%. Meanwhile, True S&P 500 has risen 17.4% rising at a yearly rate of 8.3%.
Sooner, rather than later the U.S. economy shall stop its fall, steady and begin a long run climb. It might be another decade and another banker-fueled inflation (credit bubble) before gold becomes a good speculative play.
Since 1993, SPDR S&P 500 ETF Trust (SPY) has let speculators bet long on the S&P 500 and since 2006, ProShares Short S&P 500 ETF (SH) has let speculators bet short the S&P 500. Likewise, since 2004, SPDR Gold Trust (GLD) has let speculators bet long on gold and since 2008, Deutsche Bank AG DB Gold Short ETN (DGZ) has let speculators bet short gold.
Here are ways you can play the S&P 500 and gold with ETFs.
Read more ...
In ELECTRICITY PRICES. SHOCKING, ISN'T IT? THANKS, NIXON, I explain that Richard Nixon, then president of the U.S., through Executive Order 11615, closed the gold window, which put Americans on fiduciary bank credits as money system and thus the world on a floating exchange rate scheme for international trade settlement. It is these fiduciary bank credits which constitute Federal Reserve Bank Units.
What counts is buying power, that is, how much real stuff you can buy with an ounce of gold or a share of the S&P 500. Since inflation is a banking phenomenon, using a FRBUs-based deflator, we can compare the true price of the S&P 500 against the true price of gold.
Here is True S&P 500 vs True Gold in True Dollars™.
S&P 500 in GWDs vs Gold in GWDs
From Q4 1975, through Q1, 1989, an ounce of gold let you buy more than one share of the S&P 500. Between Q2 1989 and Q4 1990, speculators struggled between the two.
The True S&P 500 won that struggle by Q1 1991. Stock speculators and investors did not look back to gold for a long time.
The peak of gold bettering the S&P 500 came in Q2 of 1980 when the price ratio of one ounce of gold to one share of the S&P 500 stood at $5.56.
From April 1, 1991, through January 1, 2009, one share of the S&P 500 let you buy more than an ounce of gold. The peak of S&P 500 bettering the gold came in Q1 of 2000 when the price ratio of one share of the S&P 500 to one ounce of gold stood at $0.18.
During the Greenspan-Bernanke Credit Bubble, the largest credit bubble in history, the average price ratio of one share of the S&P 500 to one ounce of gold stood at $0.41.
Between Q3 2011 and Q3 2012, investors and speculators once again fought between gold and the S&P 500. Twice in that period, gold bested the S&P 500.
Since Q4 2012, the S&P 500 has been pulling away from gold. In the two years, True Gold has fallen -35.4% falling at a yearly rate of -19.6%. Meanwhile, True S&P 500 has risen 17.4% rising at a yearly rate of 8.3%.
Sooner, rather than later the U.S. economy shall stop its fall, steady and begin a long run climb. It might be another decade and another banker-fueled inflation (credit bubble) before gold becomes a good speculative play.
Since 1993, SPDR S&P 500 ETF Trust (SPY) has let speculators bet long on the S&P 500 and since 2006, ProShares Short S&P 500 ETF (SH) has let speculators bet short the S&P 500. Likewise, since 2004, SPDR Gold Trust (GLD) has let speculators bet long on gold and since 2008, Deutsche Bank AG DB Gold Short ETN (DGZ) has let speculators bet short gold.
Here are ways you can play the S&P 500 and gold with ETFs.
Wednesday, April 16, 2014
WHAT ELSE BESIDES THE S&P 500 AND GOLD SINCE MARCH 9, 2009?
On March 9, 2009, the S&P 500 hit a bear market low of $676.53. When the S&P 500 rises, there are some sectors that comprise the S&P 500, which rise faster than the S&P 500 itself.
Likely, it's too late to capture the big percentage run ups as seen in these speculative vehicles. Ah, but only if you looked at these ETF-like instruments rather than stocks trading on NYSE and NASDAQ, you might be smiling now.
The chart shows each vehicle along with the S&P 500.
XRT
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Likely, it's too late to capture the big percentage run ups as seen in these speculative vehicles. Ah, but only if you looked at these ETF-like instruments rather than stocks trading on NYSE and NASDAQ, you might be smiling now.
The chart shows each vehicle along with the S&P 500.
XRT
- SPDR's S&P Retail ETF tracks a broad-based, equal-weighted index of US retailers' stocks.
- BJK
- Market Vectors' Gaming ETF tracks a market-cap-weighted index of global companies that generate at least 50% of revenues from gaming and related activities.
- UGA
- United States Gasoline Fund holds near-month futures contracts for RBOB gasoline traded on NYMEX.
- PBS
- PowerShares' Dynamic Media ETF tracks an index of the U.S. media industry stocks.
- GLD
- SPDR's Gold Trust tracks the gold spot price, less expenses and liabilities, using gold bars held in London vaults.
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