How to read the news

Here are excerpts from three news stories from 7-Mar-2008 Marketwatch.com, as they were written, and as I would read them. In each case, I have simply taken the USD figures given in the story and converted them to gold grams, then reworded the story to fit the new numbers. In some cases, I've added YTD data to put the reported figures in a larger perspective.

I'm preparing a special report on how to do these calculations, and shortcuts that make it easy to translate anything you're reading from "dollarese" into language that you can understand and act upon.

As you read the examples below, you'll see that some numbers are more or less unchanged. These involve time periods where the value of the dollar is pretty stable, as it usually is from day to day, or where it has made an excursion up or down in value and ended at about the same level as at the beginning of the period.

You will also see some cases where the change in value is dramatically larger than the dollar figures would suggest. These are usually cases where the declining value of the dollar is adding to the decline in the value being reported. Of course, a rising dollar would also add to the increase in value of an asset or security.

And then, there are cases where measuring in gold completely reverses the meaning of the statistics being given in dollars – these are the fun ones!

Ready to explore the world from a new perspective? Great! Here we go!

Excerpts from a bank press release:

SANTA PAULA, Calif., Mar 07, 2008 (BUSINESS WIRE) — Santa Clara Valley Bank (SCVBank) (SCVE) today announced its 2007 fourth quarter and year-end financial results.

Stated in dollars:

The Bank reported that quarterly revenue was $1,970,000 in the fourth quarter, an increase of 9.4%, or $170,000 over the $1,800,000 of revenue in the fourth quarter of 2006. The Bank's fourth quarter net income of $174,000 was up from $118,000 in the fourth quarter 2006, an increase of 47%.

Stated in gold:

The Bank reported that quarterly revenue was 73.25 kg of gold in the fourth quarter, a decrease of 16.6%, or 14.82 kg less than the 88.07 kg of revenue in the fourth quarter of 2006. Despite this revenue reduction, the Bank's fourth quarter net income of 6.47 kg was up from 5.77 kg in the fourth quarter 2006, an increase of 12%.

Excerpts from a report on stock declines

U.S. stocks decline as jobs drop points to recession
Nasdaq, S&P down more than 2% for week; Dow ends with weekly loss of 3%

Stated in dollars:

The Dow Jones Industrial Average ($INDU 11,893.69, -145.23, -1.2%) declined 146.70 points to 11,893.69, giving it a weekly loss of 3%. Since the year began, the blue-chip index has lost more than 1,370 points, declining 10% in value.

On the New York Mercantile Exchange, gold futures swung between gains and losses after the government reported the jobs data, with gold for April delivery falling $2.90 to end at $974.20 an ounce.

Elsewhere on the NYME, crude-oil futures edged lower, with crude for April delivery down 32 cents to settle at $105.15 a barrel.

Stated in gold:

U.S. stocks decline as jobs drop points to recession
Nasdaq, S&P down more than 2% for week; Dow ends with weekly loss of 3%

The Dow Jones Industrial Average ($INDU 380.396 grams, -3.114 grams, -0.8%) declined 3.11 grams to 380.396, giving it a weekly loss of 3.1%. Since the year began, the blue-chip index has lost more than 112 grams, declining 23% in value.

On the New York Mercantile Exchange, US dollar futures swung between gains and losses after the government reported the jobs data, with dollars for April delivery rising 0.3% to end at 31.927 milligrams of gold. So far this year, the US Dollar has lost 14% of it's value.

Elsewhere on the NYME, crude-oil futures edged lower, with crude for April delivery down 0.1% to settle at 3.363 gold grams a barrel. So far this year, April crude has fallen 5%, from 3.541 gold grams per barrel at the close of 2007.

Excerpts from an article on food costs:

Stated in dollars:

Rising costs move down the food chain

SAN FRANCISCO (MarketWatch) — The soaring cost of grains, dairy products and other edible commodities continues to pile up on consumers as producers seek to dull the impact of higher prices on their own bottom lines, according to scanner data from U.S. supermarkets.

What are shoppers paying more for?

According to Citigroup, which based its research on AC Nielsen data, food categories with the biggest price spikes for the 12 weeks ended Feb. 23 were:

Cheese, up 14.1%
Yogurt, up 8.3%
Ground coffee, up 7.1%
Frozen pizza, up 5.5%

Stated in gold:

Falling food costs thrill savvy shoppers

SAN FRANCISCO (MarketWatch/PricedInGold) — Despite the higher dollar prices marked on supermarket shelves, smart shoppers realize that it takes a lot less of their gold to buy groceries than it used to, according to scanner data from U.S. supermarkets.

How much are shoppers saving?

According to Citigroup, which based its research on AC Nielsen data, food categories with the smallest price drops for the 12 weeks ended Feb. 23 were:

Cheese, down 5.2%
Yogurt, down 10.0%
Ground coffee, down 11.0%
Frozen pizza, down 12.3%

Prices in other categories were down even more!

A final thought

Remember that the US Dollar (and indeed, all modern fiat currencies) are subject to change in value without notice. And they DO, every day! Holding your assets in one of these currencies is extremely risky… not something for widows and orphans, or even normal investors. It's a game for speculators and gamblers. Even a US Treasury bill, touted as the safest investment you can own, only pledges that the "full faith and credit" of the US Government will be used to give you back your US Dollars, NOT that those dollars will buy much when you get them.

So don't be fooled – price your investments (and your news!) in gold.