Even though I missed only a few of the general sessions, I can't wait to get my hands on the recordings to go through them again for profitable ideas, and to clarify in my own mind the arguments, pro and con, on issues that will be key to my investment decisions in the coming months.

One of those "out in the hallway" discussions got me to thinking about wages, valued in gold… and I put together a chart of wages (average hourly earnings of US production workers, as tabulated by the BLS in series CES0500000008, to be precise) to see what they've been doing.

I was shocked to see that since January 1964, a total of 534 months, there have been only 36 months in which wages were lower than they are today – mainly in the period from 1979-1981. The most recent period when they were this low was early in 1988, 20 years ago. Since then they have seen a high of 1.75 grams/hour in April of 2001, before falling back to their current level of 0.6 grams/hour in July of 2008.

I thought it would be fun to take a look at how things have changed over that 20 year period in terms of gold prices, many of which can be found in the charts section of this web site. Here is a summary:

1) Although wages are about the same, per capita disposable income is up 9%. I suspect this is due to many factors, including lower tax rates, changes in government "benefits", more dual earner households and smaller families. It could also be influenced by the proportion of "production" jobs in the economy. In any event, this is a modest increase for 20 years!

2) First class postage is down 6%, one of the few things I could find that was down!

3) Stocks were a mixed bag. The Dow Jones Industrials are around 400 now, up from about 125 in 1988 – a rise of 220%, even after their spectacular fall from the 1999 high of 1,400. What a roller-coaster ride! On the other hand, Japanese stocks as measured by the Nikkei 225 Index were much stronger in 1988, and have fallen from 12 to 4.5 – a drop of 63%. I plan to do a more detailed comparison of these markets in a future post.

4) Home prices, as measured by the Case-Shiller CSXR Index, are up about 33%, even after falling more than 50% over the last three years.

5) Commodities are up strongly: silver up 29%, gasoline up 89%, copper up 98%, crude oil up 275%, and wheat up a whopping 347%.

The US government's own debt is also a huge and growing problem. While in 1988 it was a "mere" 2.6 trillion USD, today it is over 9.4 trillion USD, up 262%. If this debt had to be settled in gold, that would require 308,376 tonnes of gold today, up from 204,000 back in 1988. It's a good thing that this debt is denominated in US Dollars that can be created out of nothing with the press of a few computer keys! There are only 8,133 tonnes of gold in the US reserves (even this figure is disputed, as it has not been physically audited for decades.) And to put the size of this debt in perspective, all the gold ever mined, since the beginning of time, is estimated at about 150,000 tonnes – that's less than half of the current US Federal debt.

But these figures, as grotesque and gargantuan as they are, are just the officially acknowledged tip of the iceberg. They don't include off-budget borrowing, consumer borrowing, or the real elephants in the room, the ones no one in polite society wants to talk about – the "unfunded liabilities" and future entitlements of social security, medicare, and related programs. While current taxes are generating enough cash to cover these at the moment, due to changing demographics they are growing at a rate that cannot be met simply by new tax increases. Unless changes are made, their costs will overwhelm even the ability of our printing presses to pay for them!

How did we get to this point? What can we do about it?

At the Vancouver Symposium there was a showing of a new documentary film called I.O.U.S.A. that addresses many of these points via fascinating interviews with Pete Peterson, Warren Buffett, former Comptroller General of the United States David Walker, and other luminaries. It's a wonderful film, well made, very thought-provoking, and highly recommended.

Most people have little grasp of what is happening with their money. Most have no idea what is heading down the tracks toward them financially. If you have family and friends in this situation, I urge you to take them to see this movie. It is fun, fast paced and informative. They may be shocked, but they won't be bored!

There will be a special "one day only" premier showing of the film all over the USA on Thursday, August 21st. I'm going, along with many of my friends who weren't able to see it in Vancouver. You can get details, watch a trailer and check out the special offer Agora Financial is making to those who pre-purchase tickets, as well.

I hope you will join me!

From a March 11, 2008 story in the Associated Press:

As originally stated in dollars:

Gas Prices Rise to New National Record

NEW YORK (AP) – The cost of filling up the family car climbed to a record high Tuesday, adding to the challenges consumers already face with falling home values and rising food prices.

Gas prices at the pump rose overnight to a record national average of $3.2272 a gallon, according to AAA and the Oil Price Information Service. That's a tad higher than the previous record of $3.2265, set last May.

On Tuesday, light sweet crude for April delivery surged to a new trading record of $109.72 on the New York Mercantile Exchange before retreating after the Energy Department and International Energy Agency cut crude consumption forecasts for this year. Futures settled 85 cents higher at $108.75 a barrel, a new record.

Where gas and oil go from here is anybody's guess. Many analysts expect prices to moderate, while others predict oil could keep rising to $120 a barrel, or higher. And with demand for gas expected to rise as warm weather arrives, analysts say pump prices could spike as high as $3.75 a gallon, regardless of what happens with oil prices. The Energy Department on Tuesday raised its forecast of how high prices will rise this spring by a dime to $3.50 a gallon.

Restated in gold:

Gas Prices Rise, but Remain Among the Lowest in the Last Decade

NEW YORK (AP/PricedInGold) – The cost of filling up the family car rose slightly Tuesday, but not enough to add to the challenges consumers already face with falling home values and collapsing stock portfolios. In fact, falling food prices and the lowest gasoline prices since 1996 are among the brightest spots in the consumer's financial picture.

Gas prices at the pump rose overnight to a national average of 103.6 mg of gold per gallon, according to AAA and the Oil Price Information Service. That's less than half of the recent high of 217.4 mg, set back in September of 2005.

On Tuesday, light sweet crude for April delivery rose to 3.518 gold grams on the New York Mercantile Exchange before retreating after the Energy Department and International Energy Agency cut crude consumption forecasts for this year. Futures settled 25 mg higher at 3.487 a barrel, about 5% below their price at the beginning of the year.

Where gas and oil go from here is anybody's guess. Many analysts expect prices to fall, possibly retesting 2007 lows around 2.5 grams, while others predict oil could keep rising to retest the 2007 highs of 3.85 grams a barrel, or higher. Even with demand for gas expected to rise as warm weather arrives, analysts say pump prices are unlikely to rise above 125 mg a gallon and more likely to drop below the 100 mg level, regardless of what happens with oil prices. The Energy Department on Tuesday raised its forecast of how high prices will rise this spring to 112.3 mg a gallon.

From a March 11, 2008 story in the Financial Times:

As stated in dollars:

Wall St enjoys best one-day rise since 2002
By Chris Bryant in New York
Published: March 11 2008 13:01 | Last updated: March 11 2008 20:41

US stocks enjoyed their best one-day advance in more than five years on Tuesday after the Federal Reserve announced a $200bn plan to boost liquidity at troubled financial firms.

Banking stocks surged with financial firms chalking up gains of more than 10 per cent, as traders rushed to cover short positions. The central bank plan helped allay fears that liquidity pressures were spiraling out of control.

Energy companies and other commodity producers were among the best performers as crude oil surged to another record.

The S&P 500 closed up 3.7 per cent at 1,320.63 points, its best performance since October 2002. The Nasdaq Composite soared 4 per cent to 2,255.76 and the Dow Jones Industrial Average climbed 3.6 per cent to 12,156.81 points.

The co-ordinated central bank announcement was a welcome salve for equity investors alarmed at the pattern of recent selling.

Until Tuesday the market had retreated for three successive sessions as investors were unnerved by reports of margin calls at hedge funds and soaring home foreclosures.

Tobias Levkovitch, chief US equity strategist at Citi Investment Research, had warned that “hopelessness” was setting in.

Restated in gold:

Wall St enjoys best one-day rise of the last three weeks
By Chris Bryant in New York and Charles Vollum in Honolulu
Published: March 11 2008 13:01 | Last updated: March 11 2008 20:41

US stocks enjoyed their best one-day advance in more than 3 weeks on Tuesday after the Federal Reserve announced a plan to bail out troubled financial firms that will cost 6,413 tonnes of gold – an amount equal to 79% of the current US gold reserves.

The value of the US Dollar (32.07 mg of gold, down 0.02 mg) was almost unchanged by the announcement, but banking stocks surged with financial firms chalking up gains of more than 10 per cent, as traders rushed to cover short positions. The central bank plan helped allay fears that liquidity pressures were spiraling out of control, but astute observers know that the additional liquidity will soon show up in further declines in the value of the already beleaguered Dollar.

Energy companies and other commodity producers were among the best performers as crude oil moved up slightly to 3.487 grams per barrel. Crude prices are still about 5% lower than at the start of 2008, and more than 30% lower than their high of 5.049 grams on August 30, 2005.

The S&P 500 closed up 3.6 per cent at 42.347 gold grams, its best performance since February 13th. The Nasdaq Composite soared 3.9 per cent to 72.332 and the Dow Jones Industrial Average climbed 3.5 per cent to 389.813 gold grams.

The co-ordinated central bank announcement was a welcome salve for equity investors alarmed at the pattern of recent selling, but experts warn that this relief will come at a high price as it depresses the value of the currency.

Until Tuesday the market had retreated for three successive sessions as investors were unnerved by reports of margin calls at hedge funds and soaring home foreclosures.

Tobias Levkovitch, chief US equity strategist at Citi Investment Research, had warned that “hopelessness” was setting in. He may yet be proven right, as even after today's bounce, the markets stand more than 20% below their values starting the year and more than 72% below their all time highs of August 1999.

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!

Stocks (as indicated by the Dow Jones Industrials at 474) were last this low in September of 1996. But in those days, they were on the way up – about 15 years into a 20 year bull market – just leaving the foothills behind in the dramatic run-up to almost 1400 gold grams in 1999.

Some commodities have rallied, however. Platinum in particular has shot up dramatically – from about 54 to over 70 grams/oz in the last month. Silver is also showing some strength.

Going forward, remember that the tax refunds, rate drops, and mortgage relief plans all amount to devaluation of the money in in your pocket and in your bank and brokerage accounts. Never trust values given in fiat currency: they are subject to the whims of those who issue that currency. Keep your eye on the true value of your investments and assets – their value measured in gold.