S&P Priced In Gold: Comparison Between The Great Depression And Now
For those looking at the recent moves in the gold chart with disenchanted amusement, here are some scenarios to ponder. Below are the recent cycles associated with the S&P priced in gold, where it can be seen that the ratio is once again climbing minutely to the upside, just below 0.96. That's fine, although as the chart demonstrates the lower low moves occur with greater frequency and greater downward momentum with each iteration.
Yet where this chart gets interesting is when it is recreated from the perspective of the 1930s. As can be seen, the recent lows in the ratio at around 0.9 are a joke compared to the nearly 0.2 achieved in 1932... just before FDR decided to make gold ownership illegal (and an implied gold price of over $5k in today's terms).
Are we at a point where the market's own voluntary establishment of a gold standard, or an alternative currency, is sufficient to see the "now" chart take the next decisive move in the ratio lower? And ignore the "stability" of Europe - it is all a scam predicated upon a systematic farce, and the very same conditions that caused spreads to blow out in May and June are still there - the only thing that has changed is how Europe deals with the symptoms: just like our Fed, the solution to all manifest symptoms is for them to be drowned in ever more money. Yet neither Europe, nor the US, has still addressed the actual cancer at the heart of the system which makes symptomatic breakouts all the more prevalent. And as the market once again realizes this simple truth, look for the SPX-gold relationship to take out recent lows. The only question as far as we are concerned: will Obama "learn" from the past, and do to gold what FDR did?
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