The Fallacy of Comparisons
QUESTION: Marty, are ratios ever really a valid means of judging value? It seems like that is always the argument to buy. I saw that in 1980 with silver and gold. Now it seems they tout the Gold/Dow Ratio. All I have ever done is lose money on these claims. Any guidance here?
JN
ANSWER: It really does not matter what instrument people try to relate. They also try to claim something is cheap or over done based upon some ratio. The Dow/Gold Ratio simply shows like everything else that there are wild swings. The high in the ratio was obviously when gold bottomed in 1999. The decline in gold now is a normal correction process not some drastic altered state. In 1980, the ratio fell to 1.63 and in 1999 it rose to about 39.8. The last rally only saw the decline 7.73 – nowhere close to the 1980 level. This makes perfect sense since gold in real terms has not exceeded the 1980 high despite the claims it is a hedge against inflation rather than a collapse in confidence.
The same problem exists with the Silver/Gold Ratio. I remember the sales pitch back then silver would rally to 16:1 because that was were the official ratio used to be. Gold they said would double going to $1600 and silver $100. Of course, gold peaked at $875 and the Silver at $54.
I do not care what we are talking about – ABSOLUTELY EVERYTHING fluctuates. There is NO guaranteed trade or else the bankers would not require bailouts. Everything moves and nothing remains constant. This is why Communism collapsed and it is why currency PEGS do not last. That is just the nature of everything.
Gold Promoters – Here We Go Again
Trying to argue with a Gold Promoter is trying to argue with a Democrat that they should be a Republican. It will never happen because it is their life and how they make money. If we look at the commodity sector as a whole, in 1919 Wheat was 356. It reached in 2008 13500. That is a 37.92 advance. If we take gold in 1919, it was $20.67 applying that advance would be $772. If we take crude oil, here in 1919 it reached 233 compared to a high in 2008 intraday of about 14800. This is an advance of 65.519 and apply that to gold we reach $1335. So is gold really way out of wack when measured against a basket of commodities? The entire premise that only gold is suppressed does not hold up when it is compared to all commodities. Gold is where it should be. It will swing to excessive highs and lows either side of the median. That is what all markets do.
Sorry – no commodity has ever risen in tandem with the increase in money supply. The bursts of “hyperinflation” are not unique to commodities or gold. Everything tangible rises in value including real estate. The replacement currency in Germany to stop the hyperinflation was not backed by gold, but real estate. To argue that somehow metals would be substantially higher BUT FORpaper gold and systemic manipulation is just nonsense. There are futures on everything and the bankers have front-runed clients for years.
Ask the average American do they believe the United States will collapse? Ask the younger generation if when they pay for a coffee at Starbucks with their cell phone do they realize only gold is money. The Phase Transition that results in dramatic sharp increases are all about a collapse in confidence. Slandering me will not make gold rise. It merely shows how worried these people are that what they preach has hurt so many. This is not about some religion or fixed dogma. This is about figuring out how everything function in the world collectively – not a single market.
And by the way, everything alleged by the government was dropped and Republic National Bank/HSBC plead guilty with no jail time provided they return what they took. Slandering me will not change gold. They preach to a shrinking choir and I have gone toe-to-toe with the bankers. Been there live and looked them in the eye. HSBC plead guilty, so why try to cover that up if you are against the bankers?
On top of that, the government escorted HSBC into court to put aGAG order on me to PREVENT me from helping the Japanese against HSBC. That demonstrated to the world whose side the government always takes – bankers v people. And what did the government have me say:
I find it very curious that this movie is all about me fighting against the banks for manipulating government and the markets, yet the gold promoters will do whatever it takes to prevent people from seeing the movie. I really question whose side are they on? Every manipulation from Buffet in silver onward, has been to the UPSIDEin the metals. GATA even knew about Buffet because I spoke on the phone with them. Why are the manipulations to the upsideREAL bull markets and only declines are FALSE?
This should be about making money – not supporting the bankers who create false rallies knowing they are preaching to the choir and they have a legion of gold promoters to lead the crowds into buying so they can sell the high every time.
Gold and the commodity sector will rally when it is TIME. They fail to even grasp what BIG BANG is all about. Gold will not rise until the people question government and that is the masses – not a small segment.
Manipulation and the World is Flat
There are always going to be people who reject our models. Some professor coming out claiming there are no cycles is typical. Light to him is also a straight line because he cannot see the wave nor does sound travel in waves for he does not hear the oscillations.That is the way it is with anything different. They will just dismiss it or criticize timing analysis and the business cycle because they do not WANT to change. These sort of people believe that the government has a role and can manipulate society be it by lies and deceit or outright laws and punitive action – the big stick.
It is like those that insist gold would be $30,000 but for systemic manipulation to keep it down. The very assumption that something can be systemically manipulated implies everything can be and that is precisely what Karl Marx argued and Communism sought to create. Every economist ever since has assumed Marx was correct and government functions with that goal in mind.
Our models demonstrate that the future is predictable and that everything is absolutely connected. Gold can no more be $30,000 and a singleton within the whole world than a politician and change the economy in the middle of a global depression. We are all connected and there are things bigger than any individual, market, or economy. If gold has not rallied as is the case with other commodities, it is because it is just not time.
Yes, the banksters have tried to manipulate everything to create the perfect trade. Hell, that is what the movie is all about. But they have FAILED each and every single time running to government to be bailed out. They have NEVER succeeded even once. Sure they front-run and they scalp profits from manipulating a market with the trend. No matter what they have touched, and it has been a lot, they cannot manipulate anything against the trend. That is the simple bottom line FACT for if it were true, then Rome would never have fallen and BIG BANG could not possibly happen for they would never go into a sovereign debt default when they can manipulate everything. Come on. Let’s stop the excuses.
There is a substantial
Political Spin from Australia
Political Spin – The way it’s done correctly – this time in Australia …
No matter what side of the political fence you’re on, THIS is funny and very telling! It just all depends on how you look at the same things. It is probably made up, but it is not far from the way politicians really do spin the facts.Judy Rudd an amateur genealogy researcher in south east Queensland , was doing some personal work on her own family tree. She discovered that ex-Prime Minister Kevin Rudd’s great-great uncle,
Remus Rudd, was hanged for horse stealing and train robbery in Melbourne in 1889. Both Judy and Kevin Rudd share this common ancestor.
The only known photograph of Remus shows him standing on the gallows at the Melbourne Jail.
On the back of the picture Judy obtained during her research is this inscription:
‘Remus Rudd horse thief, sent to Melbourne Jail 1885, escaped 1887, robbed the Melbourne-Geelong train six times.
Caught by Victoria Police Force, convicted and hanged in 1889.’
So Judy recently e-mailed ex-Prime Minister Rudd for information about their great-great uncle, Remus Rudd.
Believe it or not, Kevin Rudd’s staff sent back the following biographical sketch for her genealogy research:
“Remus Rudd was famous in Victoria during the mid to late 1800s. His business empire grew to include acquisition of valuable equestrian assets and intimate dealings with the Melbourne-Geelong Railroad..
Beginning in 1883, he devoted several years of his life to government service, finally taking leave to resume his dealings with the railroad.
In 1887, he was a key player in a vital investigation run by the Victoria Police Force. In 1889, Remus passed away during an important civic function held in his honour when the platform upon which he was standing collapsed.”
NOW That’s how it’s done, Folks!
That’s real POLITICAL SPIN.