Moses Kim

Prepare for a Lower Dow to Gold Ratio

granger,

The S&P would work just as well, if not better, in my opinion. However, the S&P has only been around since 1957, so it's hard to extrapolate from historical data in the same way that you can with the Dow.


On Sep 03 12:06 PM granger wrote:

> I have a question. Why is it compared to the DOW. Is there any credence
> to using the S&P 500 or Russell 3000. (maybe Wilshire 5k)
>
> I would be interested in the authors thoughts

'Green Shoots' Are a Mirage: Economy Will Deteriorate Further

Your statement is true, but a little misleading. The only reason the Great Depression ended near the peak of unemployment was because unemployment stayed elevated for such a long period of time. From the trough in unemployment to the end of depression was roughly 7 years. Not much of a leading indicator there.

Also, GDP growth has nothing to do with the end of a downturn. We can still be in a recession, or depression for that matter, with sustained positive GDP numbers. The Great Depression after 1933 is one example.


On Aug 13 11:52 AM thiazole wrote:

> The Great Depression ended when unemployment was near the peak, yet
> we still saw 10% annual growth for several years.

'Green Shoots' Are a Mirage: Economy Will Deteriorate Further

1. Writedowns are understated. Mark-to-imagination still rampant. Top-line revenue non-existent.
2. You can't be sure of that. But the point is, GDP is weaker than advertised.
3. What was the one time this century that relationship did not hold true? The Great Depression, which is the closest precedent we have in terms of the magnitude of unemployment.
4. Great


On Aug 13 10:44 AM thiazole wrote:

> The arguments in this article are lacking.
> 1. P/E - David already explained the flaw in your reasoning
> 2. Government spending - as you correctly point out, this effects
> future generations (think post WWII), but it won't cause the CURRENT
> economy to go into a tail spin.
> 3. Unemployment - How many times do people have to be told that unemployment
> is a lagging indicator - look at your own chart! Average weeks unemployed
> peaked out in 2004 after the last recession! That was 2 years into
> a bull market and 3 year after the recession ended!
> 4. Consumer spending - your only good point, but if you consider
> that inventories are still shrinking (and if anything, the rate they
> are shrinking is accelerating), consumers MUST be buying more than
> is being produced (or do you have an alternate hypothesis?). How
> are we going to keep inventories from disappearing unless companies
> start hiring?

'Green Shoots' Are a Mirage: Economy Will Deteriorate Further

Does nobody,

"Yes consumption is 70% of GDP but it is intrinsically stable, people have to buy food, clothes, gasoline, etc. Swings in GDP are not driven by consumption and this is statistically provable as well as intuitively sensible "

Hence my point about increased government spending. All spending is not created equal. I don't have the exact stats on me, but we are getting to the point where more and more government spending is having less and less of an effect on GDP. The party can only go on for so long.


On Aug 13 02:33 AM Does nobody understand what long term actually means? wrote:

> While I don't disagree with the broad conclusion it is worth debunking
> the myth that where goes consumption so goes the economy. Yes consumption
> is 70% of GDP but it is intrinsically stable, people have to buy
> food, clothes, gasoline, etc. Swings in GDP are not driven by consumption
> and this is statistically provable as well as intuitively sensible

The Stock Market Is Not a Leading Indicator

With all the government intervention, I wouldn't be surprised by an AAAA-shaped recovery, ala the Great Depression.


On Aug 04 09:18 AM Roger Knights wrote:

> If the past is prologue, we'll have an A-shaped recovery.

The Case for Depression, Part 3: Demographics

rdd,

Yes he does, although I'm not sure if they're available on the web. You can check out his book though "The Great Depression Ahead".

To summarize, Europe is in even worth shape than the U.S. Japan preceded our current demographic cycle by about 2 decades- hence the lost decade(s). They have decent demographics in the next decade, but after that it doesn't look good for them. Demographics in China look good for the next decade or so until they start to feel the effects of their 1 child policy.

Implications of a Rising Gold to Crude Oil Ratio

Freya,

I also see 850 or perhaps even lower as a possibility. I will continue to add to my positions accordingly for the real move in gold. The fundaments are still very strong for gold.

Implications of a Rising Gold to Crude Oil Ratio

Freya,

"Gold is moving and realigning to the Ratio you posited. With WTI around $61 and Gold around $910, the ratio is around 15."

That's not saying much, it was 15 yesterday too. If you read my post again, you will see that I say to keep an eye on the 30 day, not to go all-in on gold. If you're working from a longer term framework, days like today mean nothing.

Implications of a Rising Gold to Crude Oil Ratio

You're right, gold bricks are being stored in vaults. I think everyone will get a good lesson in dynamic processes when gold starts moving.

Yamana: Thinking Trades in Gold

Shorts have to cover sooner or later, no?

Yamana: Thinking Trades in Gold

rick,

All corrections are a gift. In the bull market of the 70's, gold actually declined by 50% at one point before taking off. It's when people start losing hope that gold starts moving.

A Brief Primer on Choosing Gold Stocks

Long Haul,

Mexico would probably be right under those 3 countries I mentioned, although there is a history in Mexico of disruptions of mining operations by the local population. Minefinders is one relatively recent example.

A Brief Primer on Choosing Gold Stocks

Bill J,

Namely the risk of nationalization of gold mines. Crystallex, a company with great potential and mines in Venezuela, comes to mind as a company that got hurt by nationalization.

Also, there's the possibility gold confiscation (ala 1933) and the fixing of the price of gold, which would artificially suppress the value of gold stocks.


On Jul 03 12:26 PM Bill J wrote:

> In this article (and a good one indeed) you made the comment:
>
> "The U.S., Canada, and Australia are solid choices (although recent
> developments in the U.S. have me worried). "
>
> Exactly what US developments have you worried?
>
> Cheers,
>
> Bill J

A Brief Primer on Choosing Gold Stocks

I agree, you can't go wrong with physical gold as it is an insurance policy against systematic collapse. Any precious metals investments should probably start with physical gold at its core.


On Jul 02 01:53 PM DONE_SONZ wrote:

> Good article.When the stock market fell like a led balloon not too
> long ago, the other side of the gold buyers jumped in.The side of
> holding gold as a source of value versus everthing else falling.Right
> now it seems most are holding for future inflation and currency worries.I
> would say hold for all of these reasons.I prefer the miners also,but
> physical gold is good too.

The Case for Depression, Part 2: Credit Destruction

Swaps,

Thanks for the comment.

I should have qualified the debt statement by saying that debt of any magnitude was limited to the government sector. Back then we didn't have credit cards, so consumers weren't overly indebted, and the commercial paper market wasn't abused by corporations for short-term funding.

There definitely was a run on deposits during the Great Depression as over 7,000 banks failed. Margin loans worked through intermediaries of the bank and speculators- aided and abetted by the Federal Reserve.