russell exerpts:
Right now I'm looking at a chart of a critical ratio; the ratio is gold divided by the S&P (courtesy of Growth Fund Guide, PO Box 6600, Rapid City, SD 57709). A pretty interesting chart. Gold hit a low vs. S&P in September, 1929. Then it hit a high vs. the S&P in April 1942. Next gold hit a low vs. the S&P in May 1969. From there gold hit a high vs. the S&P in January 1980 (older subscriber remember that little interlude).
From January 1980 the ratio sank to a low in July 1990. The July 1999 low, by the way, was the lowest ratio of gold vs. the S&P ever. Versus stocks, gold had never been so out-of-favor. The central banks had convinced investors that gold had been reduced to a useless commodity, something to fill your teeth with. But how about gold as real money, as the Constitution says it is? Are you kidding. Does the Constitution really say that?
Since July 1999 the ratio of gold to the S&P has been rising. The ratio right now is still a very low 0.26. But the ratio is on the rise. My guess -- within a year the ratio will be near .50. At .50 gold will buy half the S&P. We'll watch the ratio. It should be fun, if nothing else.
But let me put it this way, gold right now is cheap, dirt-cheap vs. stocks. In fact, they're giving gold away vs. stocks. Hey, you can quote me on that.
Below is the section of an interesting e-mail that I received yesterday.
M3 is the broad definition of the U.S. supply of money and is currency in circulation plus private checking accounts including those in interest-bearing Now accounts plus retail savings accounts and money market
mutual funds plus large or wholesale time deposits, money market funds held by institutions and Eurodollar deposits held by U. S. residents at foreign branches of U. S. banks as well as at all branches of Canadian and British banks.
For the week ended March 11, 2002, M3, the U. S. money supply, (not seasonally adjusted) averaged 8161.5 billion dollars per day.
8161.5 Billion rolls right off the tongue but it really is... $8,161,500,000,000
Divided by 6000 tons of gold = $1,360,250,000 per ton
$ per ton divided by 2240 pounds in a ton = $607,254 per pound
$ per pound divided by 14.58 troy oz in a pound =
Ready??.............
$41,649 per oz. Sure is a lot of paper money floatin' around out there. |
