Saturday, February 24, 2007

The Dow Priced in Gold

(Click on chart to enlarge. The charts start at 1998.)

Reality is not always what most think it is. The Dow Jones Industrial Index has many prices: US dollars, Yen, gallons of gasoline, quarts of milk, gold, silver and more. Pricing the Dow (an index of 30 stocks) in gold is one of the ways to get a more realistic valuation of it, those poor souls who think that they are back into positive territory since 2000. They do not realize that the unit of measure/account aspect of the US dollar has changed since 2000, a lot, at about 8-10% per year. If the US dollar was a yard stick, then it's length has been shortened about 8-10% per year. Most people are still using the yard stick not realizing that it kept getting shorter every year since 2000.

Despite the Dow being up from its 2003 bottom to more than its 2000 high, the purchasing power of their investment in the Dow stocks is still way, way down from where it was at the Dow top in 2000. The NASDAQ and S&P 500 are in worse shape. This is what unrestrained creation of US dollars out of thin air can do. No wonder the US Federal Reserve Bank is illegal, unconstitutional.

This also shows the value of owning gold when government treasuries and their central banks get out of control.

Some "money" ("money" today is really just tokens) supply growth numbers over the last 12 months. This is really what inflation is which inevitably leads to higher prices here and there, and the theft of value stored in "money":
UK M4 +13%
Eurozone M3 +10.6%
China M2 +15.9%
South Korea M3 +10.6%
Australia M3 +13%
Russia M2 +48%
Reconstructed US M3 +11 to 11 1/2%
http://www.shadowstats.com/cgi-bin/sgs/data
http://www.nowandfutures.com/key_stats.html
This is some serious theft of the stored value element of monies, currencies and tokens. Owning gold and silver is your defense from your government's treasury and central bank theft.

"The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite." --Thomas Jefferson

“There is absolutely nothing to be said for government by a plutocracy, for government by men very powerful in certain lines and gifted with 'a money touch,' but with ideals which in their essence are merely those of so many glorified pawnbrokers.” --Theodore Roosevelt, 26th president of the US

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