I've been experimenting with a new charting technology called "Beyond XL Charts". It allows calculations such as conversion from USD to Gold grams, and taps into online data streams to provide charts that update automatically. Two new charts have been added using this technology: LME cash copper, and Kansas No. 2 Wheat.
Based on numbers from the St. Louis Fed, our newest addition to the Charts section of the website shows the US GDP in gold grams – billions of them!
This series is similar in appearance to the long term DJIA, but with less volatility. This makes sense, as stocks tend to follow in the footsteps of the overall economy. But the Dow has it's own sense of timing, peaking about 4 years before the GDP in the 60s, and falling much further during the 70s, then rising over 36 times in value from 1980 to 1999, while the GDP rose a little over 9 times from it's low. Once again, the Dow peaked first, in 1999, while the GDP kept climbing until 2001.
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The Charts section has been updated with a new chart of the Dow Jones Industrial Average, this one from 1900 to present. The three big bull markets of this 107 year period, and the following bear markets, are easily seen. It is clear that a lot of money can be made – and lost – investing in stocks over the long run.
From 1904 to 1929 the Dow grew 12 times in value from 47 to 568 gold grams, then gave up 89% of that gain, ending at 64 grams in 1933. In the next phase, the Dow grew almost 14 times, to 893 grams in 1966. This was followed by a long decline, losing almost 96% of it's value, finally bottoming around 37 grams in 1980. Then the next bull market emerged, growing over 37 times to 1,393 gold grams in 1999. The 8 years following this all time peak have been a downward march, representing a loss of almost 56% to the August 31, 2007 close of 618.262 gold grams.
What will the future hold? I would love to hear comments from technicians on this topic… But if the last two market cycles are any guide, I suspect we will see the Dow trading below 200 gold grams sometime in the next 5 to 10 years, and it may not be until around 2035 that a new high is made.
There are many roads that could lead to the 200 gram level; the Dow could move sideways as the value of the dollar shrinks, or the Dow could keep making "new highs" in terms of a plummeting dollar, or the dollar could stabilize or even strengthen while the Dow collapses in nominal terms.
But if your goal is to build your real wealth, the key is to keep your eye on the ball: investing in assets that are growing in gold value, regardless of their price as viewed in the fun-house mirrors of fiat currencies. The Custom Chart service can help you identify those opportunities, and we will be bringing more tools online in the future as well.
Filed under home currency, monetary universe, new highs, price of gold, wages and salaries by
After last week's wild ride, I've updated all charts on the site to August 17. The big surprise to me was silver, which has fallen off of a cliff! Uranium is continuing it's slide as well, but it still by far the best performer of the last few years. The DJIA has been weak and volatile, but hardly in free fall, and most other prices also seem pretty mellow when measured in gold. This tells me that it's the dollar that is gyrating – and the Fed's lowering of the discount rate is a flashing warning that more inflation is dead ahead.
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Today I added a chart of US median sales prices for existing homes in gold grams, covering the years 1968 to 2006. Data for this chart comes from the National Association of Realtors via the widely respected RealEstateABC.com site. As you can see, homes were a real bargain in 1980, but have been falling since 2002, losing almost 16% of their value.
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I want every subscriber to the Priced In Gold newsletter to have a Custom Chart absolutely FREE.
If you're already a subscriber, this is my way of saying "Thanks!". If you're not yet a subscriber, sign up today — the newsletter is totally free, you can unsubscribe anytime you like, and one free custom chart worth $9.95 is yours for the asking. Give it a try on a stock in your retirement account, on your local currency, or on that "hot tip" you've been thinking about investing in… The chart you get might change your mind — or confirm what you're already suspecting. Either way, it will be fun, and won't cost you a cent to try it out.
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Just a quick note — I still haven't found a good source for gasoline prices before April of 1993 (if you can give me a URL for this data, I would very much appreciate it!) but I did find the peak price for gasoline in California in March of 1981, the price point quoted in the news articles as being the highest "inflation adjusted" price (until now) for US gasoline.
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A few months ago, my mother in law sent my wife an old copy of Woman's Day magazine. My wife loves dolls, and the January 1965 issue of Woman's Day featured articles on dolls and doll collecting (along with many other articles that would fit right in with today's magazines, such as "How to Have a New Figure for the New Year".)
What grabbed my attention, though, was the cover price of the magazine: just 15 cents.
I wondered how the price of magazines has changed over the last 42 years, measured in dollars and in gold. And it didn't take long to find out!
Woman's Day is still being published, and a quick trip to it's web site showed that the current cover price is $2.79. Using the London PM gold fix for 4/27/2007 of $21.78/gram, we see that today's cover price is about 0.128 gg. And in 1965? Gold was $1.14/gram, so the 1965 cover price was 0.132 gg.
Let's see… looks like the price is virtually unchanged over the last 42 years when measured in gold, but up a whopping 1,860% measured in dollars!
I don't think the magazine is 19 times bigger, or 19 times better… I think the dollar has shrunk to 1/19th of it's former self.
It's a great example of why I like to track prices in gold!
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This site will help you see through the fog of depreciating currency so you can really see how your investments are doing. The point is not that you should keep your wealth in gold, but that unless your investments are growing when measured in gold, you are not doing as well as you could by simply holding gold.
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