Eddie Elfenbein points out that Gold is now higher than the S&P 500.

S&P 500 at $909.

Gold at $930

This is some pretty wild stuff . . .

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Gold Weekly (cash contract)Gold_weekly_cash

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SPX Weekly

Spx_weekly_10_years

Category: Commodities, Credit, Markets, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

118 Responses to “Gold Higher than the SPX”

  1. Gold is a terrible investment.

    If gold every worked out in the long run as an investment, brass, lead and gun powder would have been a better investment.

  2. marty says:

    Gevalt

  3. Adam says:

    Does anyone consider valuations when spitting out their increasingly lower market bottom predictions? I mean, overall market PE ratio’s are substantially lower than at any point in the last 20 years. The earnings base today is much higher than it was just a few years ago in the bear market of 2000-2003. I firmly believe that now is a better time to invest in index funds than any time in the last 20 years.

    You can’t just assume that the market can fall as much as Japan in the 90′s or the S&P 500 in 2000-2004 without considering the underlying fundamentals/earnings. The yield on stocks right now is way way higher than the yield on anything else, even if corporate earnings decline further.

  4. MM says:

    Close the Market? GE should fire all the CNBC guys, WASH THEM OUT!!!

  5. Mike M says:

    Yes, and the dividend yield on S&P 500 is 3.3% compared to the ten year treasury yield of 3.78%. I was a stock bear but I think I’m buying now.

  6. Zebov says:

    I’m starting to think that the P/E ratio’s have been inflated this whole time. I think this is a 30 year correction of a completely busted monetary and economic system, much more than a “credit crunch”.

  7. PeterR says:

    Friday before a long weekend?

    All bets are off IMO.

    Support?

    ZERO !!!

  8. Pat G. says:

    A couple of months ago when I bought some silver at $15 an ounce there was no problem getting it. Now at $12 an ounce I can’t find it anywhere. So, I’m buying gold but it is also becoming as scarce. Go up and look on the websites of the big companies who sell precious metals like Kitco. There is a legitimate shortage. So, this tells me a couple of things: The price is not reflecting the shortage so it is being manipulated. And more investors are beginning to flock to precious metals as they conclude that they can not hide in stocks, bonds, treasuries or even cash.

    When capital preservation becomes more important than capital gains, precious metals are the only way to fly.

  9. Chief Tomahawk says:

    Hey BR: Didn’t they riot in Pakistan after the Karachi Exchange closed down for 7 straight days?

  10. leftback says:

    Barry, have SPX and gold ever crossed before?

  11. Mich(AU1881) says:

    Since ^IXIC1881 has been hit, I have been looking for a new main theme for my investments. My main theme for the next 12 months will be gold.

    Regards,
    Mich(AU1881)
    Commentor formerly known as Mich(^IXIC1881)

  12. Frank Jewett says:

    The stock market began climbing from 11K to 14K a year _after_ housing turned south. Clearly that was a bubble. With housing and stocks on the outs, oil rose quickly, but that was also a bubble. Now with oil in the dumper, your father’s Oldsmobile of save havens, gold, is clearly experiencing the latest stupid investor bubble. Like $120 per barrel oil (i.e. before the peak), now would be a great time to get out of gold. Like most investments, your gains are being driven by the greater fool theory rather than a rational valuation of the asset.

  13. Rich Shinnick says:

    Ok,

    Now we have hit bottom. This is my second bottom call in two days and the second one I have ever made. If I wish hard enough, can I make it happen.

    This market is too low to short, too scary to buy for many.

    When does the government crank up the prinitng presses in earnest? Helicopter Ben…we need you!

  14. Andrew says:

    Adam, I don’t have the answer, but it might do well to ask; What were the underlying fundamentals/valuations in Japan as the Nikkei cratered?

  15. Frank Jewett says:

    Zebov has it right. For 30 years, people have been pouring money into stocks rather than savings, expecting infinitely sustainable higher rates of return. The constant positive pressure as new money gets dumped into the pot is the reason why markets are generally bullish. It’s the mother of all bubbles.

  16. Paul in NYC says:

    Wait a sec- I thought they were pouring money into real estate- expecting infinitely sustainable higher rates of return…

  17. jdamon says:

    So, Frank, you are saying that when one buys stocks, we aren’t saving? What is savning? Buying CD’s and or Treasuries? Stuffing it in the matress?

    People are looking for a return on investment that at least matches inflation. Stocks are the ONLY place 99% of Americans can go to beat inflation.

    Also, who was the famed investor that said you want to be buying when there is blood in the streets? Well, I would have to say that right now there is plenty of blood, but I’m not buying. I think I have drowned in the blood…..

  18. Posted by: leftback | Oct 9, 2008 6:00:14 PM

    lb, surely in the ’77-’80 timeframe..

    People better watch out for Gold..

    echoing the first comment, it’s time, yet?, to wake up–Finance, as we know it, is an Illusion, a, wholly, Arbitrary reflection of the Real Economy.

    People would be well served to move their JMK treatises to the PoliSci section, of their Libraries, where they belong. Right next to the, brilliant, works on effective agitprop by Bernays..

    Might want to add some good Histories of the Medici family..

    As George Carlin, so rightly called it: “It’s called the American Dream(MadAve.v.1.0), b/c you’ve got to be asleep to believe it”

    If we haven’t learned, by now/soon?, that Paper and Things are two different Animals, we’re, surely, going to get lost in the jungle..

  19. Todd says:

    The earlier comments about market p/e being lower and therefore it is a good time to buy would be correct if we knew for certain what the “e” was now and going forward 6-12 months.

    We’ll get more info next week, but I worry it will not be good. And companies won’t lower guidance too far. So the next year will see companies inching down guidance across the board. It all depends on how bad the macro picture gets.

    Will we look back and say “remember how tight the commercial paper market was?” (things recovered) or will we be saying “Buffett is doing a decent job as Chairman of the Federal Lending Bureau.” (everything went to sh**.)

  20. DavidB says:

    @Posted by: leftback | Oct 9, 2008 6:00:14 PM

    The Dow/Gold Ratio

  21. Mich(AU1881) says:

    “..Now with oil in the dumper, your father’s Oldsmobile of save havens, gold, is clearly experiencing the latest stupid investor bubble…”

    Frank, thanks for calling me stupid, I would have been pissed off, but then I clicked on your link to get to your website created on April 17 2008 to teach Real Estate professionals how to use outlook. And then I wasn’t pissed off anymore.

  22. Regards,
    Mich(AU1881)
    Commentor formerly known as Mich(^IXIC1881)

    Posted by: Mich(AU1881) | Oct 9, 2008 6:02:24 PM

    Mich,

    that’s hiliarous, you crossed my mind, last night, when the .IXIC quote scrolled passed the bottom of the telescreen..

    you’ll be right, here, too..prob. may be, though, broad market inefficiences leading to, even lower, stocks of Goods to purchase..

  23. Mich(^IXIC1881) says:

    “you’ll be right, here, too..prob. may be, though, broad market inefficiences leading to, even lower, stocks of Goods to purchase..”

    Mark, I totally didn’t understand this sentence. Are you saying I will be here on this blog in the future, or saying I may be right about gold at 1881??

    On another note, I am open to ideas in terms on main themes. I am not a Technical chart person. I do well when I recognize a main theme either in a stock or markets in general and leverage to make it meaningful.

    If anybody is wondering why it was IXIC1881 I would explain that too.

  24. Vermont Trader says:

    Does anyone else find it odd that we are exactly 1 year from the markets high on 10 9 2008?

    I’ve seen a lot of crazy thing in my day and for the market to put in it’s low on the anniversary of the high wouldn’t surprise me at all.

    I’ve been bearish for 2 years and I have to observe that a pretty bad future is being priced in here…

  25. mw says:

    “ALL WE HAVE TO FEAR….IS ANOTHER BUSH SPEACH”

  26. geo says:

    Weird Al comments on the economy http://www.youtube.com/watch?v=yRVi0paZlfI ahahaha

  27. Paul in NYC says:

    Anniversary nothing- this is NOT this market’s low. Far from it.

  28. mw says:

    S-P-E-E-C-H sorry

  29. Mich,

    sorry, syntax mash-up.

    I was meaning, you’ll be right about Au~U$D 1881..

    if you’d care to exp., I’d like to hear about IXIC 1881..

    as an aside, about being on the weblog, in the Future, let us be so Fortunate that it, and the i-net as we know, stay Healthy for a long time..

  30. Mich(^AU1881) says:

    VT,
    It is not that we will not see a bottom, it is that we lost our edge in this market now. At least I have. I had a target, it has been penetrated, it can go lower, it can higher, it can go higher first then even lower later, I have no idea and I don’t want to act on the general market (ETFs) where I have no edge.

    In gold, I don’t trust COMEX,etc cash settled systems either. I am long ABX, it is working so far, and unlike what I did with QIDs getting in and out, I want to keep the Jan calls till expiration rather than trying to time the market.

  31. Rob P says:

    At what point does the March of the Machetes occur on Standard and Poor???? They come out today with negative ratings on all kinds of companies and industries. They SOBs are the ones responsible for all this shit storm to start with with their AAA rating on shit! Now after 40% drop they come out with negative ratings! What worthless asshats!!!! Way to go genius!

  32. larster says:

    Just pulled an old chart off of my corkboard behind my computer that tracks the Nikkei from 84-03 against the S & P from 94-03. The S & P tracks very closely with the Nikkei during this period. If you go out another five years the Nikkei lost 50% of it’s value vs the high of 38,916. 50% of the S & P high of 1527 on 3/24/00 would be 764. The Nikkei subsequently went on the lose another 61% which would bring the divers out of the windows. I would say that this would never ever happen except that the chart says we have been tracking the Nikkei history and our present leadeship appear5s to be as clueless as the Japanese. Hanf on to you hats!

  33. Noah says:

    Owner Earnings is right. Gold is awful. You would have been better investing in MER, C, GS, MS, WB, BAC over the past 12 months.

    NOT! Great call there momo.

  34. Frank Jewett says:

    Bob Novak has been pushing gold for decades. Is he an investment guru? You buy gold at $900 for one reason only: You think a greater fool will pay more for it in the future. The industrial applications of gold aren’t worth $900, period.

    Look at oil prices. We use oil every day. Oil is dropping like a rock because if we don’t have money, we’ll use less oil. Well, we’ll use less gold too. Everything driven by the greater fool theory is bound to crater in the long run, including gold.

  35. leftback says:

    @ DavidB: Thanks much for the Dow/gold ratio. I am too young to have been in that market, very grateful for the information.

    @ VT: I wonder how long it will be before people stop trading on fear and we get back to thinking about P/E ratios. Of course we should all remember that multiples undershoot in deep Bear markets.

    @ Rich Shinnick: We have all made bottom calls lately, Barry has had a go, and even AT made one today, and yet the misery continues. I feel sick for the unaware passive investors.

    @ Frank: You buy a house in the New York suburbs today, Frank, and I’ll keep my gold. We can chat in 1979, I mean 2012.

  36. Mich(AU1881) says:

    “..if you’d care to exp., I’d like to hear about IXIC 1881..”

    Actually it is how I found The Big Picture. When I changed jobs and moved my 401K to IRA last May, I was certain the crash was coming and now I wasn’t slave to 12 401K funds for long term investing as well.

    So I was researching for bubble charts to see what makes them pop and how they behave after the top. Long story short, I came across to Barry’s blog entry “Nasdaq(and other Bubbles) at http://bigpicture.typepad.com/comments/2005/03/nasdaq_and_othe.html

    When I looked at the mania channel chart, the message I got was “in 2007 June we are following the channel like magic. IXIC is 2600 now, according to this chart it can go as high as 2800 but more likely it will start skidding down and it will be sharp and will now stop until it is between 1500 and 2000″

    So I said it is safest to buy qids as long as it is above 2000. The middle point between 1500 and 2000 was 1750 which was 2004 lows. I added some to make sure I don’t get to greedy and wait for 1750 on the spot, hence came 1881. Also I always use 18 as the number to exaggerate things as in “man there are 18 things I need to do today”.

    I also had a theme that said in the future the security companies will make money with all the increased crime due to economic hardships and got some MOC which was an OTC stock which then got into AMEX, it went from 2.80 to 4, came back to 3 and stuck there… So that theme didn’t work but it didn’t lose me money either.

    As for Gold actually I was long NSU, a gold miner as my play account from 2003 to 2007 and it didn’t move either way so I got out gold play when this IXIC theme came to mind, so this is more going back to that theme. I’ve been also expecting a lot higher mortgage rates (hence bought a house in 2005) and that didn’t happen either. Oh well

  37. John Borchers says:

    Just doubled my 401K inflow to the market. From 6% to 12%.

    I figure I can only make out good. If the stock market really goes to $0 what does it matter because everyone will be broke anyway.

  38. Pool Shark says:

    “Gold is a terrible investment.”

    That’s precisely what Gordon Brown thought…

    just before he sold half of England’s gold…

    for $275.00 per ounce…

  39. Frank Jewett says:

    jdamon, yes, I’m saying buying stocks is not saving. Buying stocks is supposed to be investing your money in a business for a share of the profits of that business. That concept has been thrown down and trampled by people who thought the purpose of buying stocks was to sell them to a greater fool. The market has been heading in that direction for several decades.

  40. Winston Munn says:

    “You got to hidey hide. You got to jump and run.”

    Here lies a piece of the puzzle. As everyone knows, the U.S. is dependent on foreign purchases of debt to keep the lights on and the front door open. Foreigners now hold about $2.5T of U.S. debt, or about 25%.

    Just how does the Fed monetize its way out of this trap when those foreign holders would lose billions upon billions in the devaluation, yet we depend on them taking on 2-3 billion daily in new supply?

    The Fed cannot monetize without worldwide backlash.

    So instead of monetizing, the Fed and Treasury are attempting to replace bad assets with good Treasuries, but the Treasury keeps increasing its demand to make the trades. All of this Treasury demand is taking the available support so none can go to other asset classes – this is the “crowding out” process that Lee Adler named quite some time ago.

    But with Treasury borrowing to buy troubled assets that have no chance of ever being fully repaid, that means the debt backing of the very treasury itself is in question.

    How much longer can this scheme work until higher risk premium on U.S. treasuries is demanded?

    “You got to hidey, hidey, hide. The old man down the road”

  41. John Borchers says:

    Winston, you haven’t figured that the US is powerful enough in depression to take the other countries which we owe money too out first, LOL.

    If China goes broke first then we don’t have to pay them do we? LOL.

  42. Barley says:

    Russia will begin to sell gold to offset market losses and make up the oil revenue.

    Monday could be interesting.

    Ya think the G20 will pony up the 5T by Sunday?

  43. Chockablock says:

    Whaddaya you all mean trashing gold? Since 2001, gold has increased and held its value. Nothing else is doing that.

    Someone needs to point this out.

  44. Loan says:

    How do I buy gold?

  45. bdg123 says:

    You were right back in 2005. Just way too early. Then you lost your mind and bought some of the slop coming out of Wall Street. Dust off your 2005 work. Dow 3000-3500, S&P 400-450.

  46. Winston Munn says:

    John Borchers,

    Exactly right. But that reminds me of that movie – War Games, was it? – where the computer came to the conclusion about nuclear war “that the only winning move was not to play.”

  47. Frank Jewett says:

    leftback, I’m not advocating that anyone buy real estate. That’s a red herring. I teach technology to real estate agents so that I can spend time with my family. Hopefully that’s okay with you and Mich, though frankly it should never have come up in this forum. Personal attacks suck!

  48. whosonfirst says:

    Gold is and always has been an inflation hedge , Frank. When the government runs out of tricks it will simply print money, thus debasing the currency. This is not a big secret.

  49. Posted by: Chockablock | Oct 9, 2008 7:11:42 PM

    Bud, it’s almost 2009, not 2001, things change..

  50. Mich(AU1881) says:

    “Hopefully that’s okay with you and Mich, though frankly it should never have come up in this forum. Personal attacks suck!”

    You are right Frank, I apologize, really do.

  51. John Borchers says:

    That was a good movie Winston.

    The time to go short was when we were with Barry nov 07 before everyone else knew what was going on.

    Now, it’s getting late. While I don’t know what you are doing I know what I am doing.

    I’ll continue to play this market harder now on the long side.

    I might even put in 30% of my income to the 401K if it gets really bad. Dow 3500?

    Those who were prudent or shorted the market when people were building castles in the clouds have the capital to take the risk the other way now.

  52. debreuil says:

    You used to drive me to work in the morning

    Friday night you’d drive me all around

    You used to love to drive me wild babe

    But lately girl you get your kicks from just a drivin me down, down, down, down…

    - Bruce

  53. Lars, do you have some web charts we can look at?

  54. unleaded says:

    How Gold is an investment i don’t understand. It is the most useless of metals and if depression comes, i wouldn’t trade a cup of hot soup with all the gold in the world. Anyway, the gold bubble has a belivable concept behind it(cap preservation),surplus of funds with sortage of opportunities, the facts favor buying gold, and many other characteristics of a bubble.

  55. Keith McKellop says:

    Hmmmm Let’s see… Dow 8579/930 Au = 9.2
    looks like we need another 50% haircut from here before we hit the bottom. Not straight down of course.

  56. Frank Jewett says:

    Accepted. As for gold, it rocketed up in the late seventies as equities fell, but it cratered in the early eighties. Anything 4 out of 5 dentists recommend is likely to form bubbles and craters as the herd moves in and out of it, including real estate.

    The true value of property is the rent it can generate, unless you live in it. The true value of gold is what the market will bear for ornamentation and industrial applications. I think $900 is a huge premium on gold relative to it’s true value, so I would caution those buying gold, whatever their reasons, to beware of the herd turning against them as it turned against gold owners in the early eighties.

  57. Winston Munn says:

    @John Borchers,

    I’m sitting in cash, hoping I’m wrong about the Japan scenario but afraid that I am right. I’d rather get 100% invested, but if the “Lost Decade, American Style” is the next hit movie, cash isn’t a bad place to be.

    “When the government runs out of tricks it will simply print money, thus debasing the currency.”
    Posted by: whosonfirst
    @whosonfirst,
    It isn’t that simple.

    “We see America as a force of good in the world. We see an America of exceptionalism.” – Miss Alaska, first runner up.

  58. Bruce in Tennessee says:

    Leftback,

    I see they have your picture on the MSNBC website tonight…was the day that bad?

  59. Winston Munn says:

    The story of subprime in song:

    http://www.youtube.com/watch?v=qSz6X5NMXnM

  60. Posted by: Mich(AU1881) | Oct 9, 2008 6:56:08 PM

    Mich,

    I hear ya. Long-term charts are invaluable, to me, they make it so much easier to see Trends.

    Also, thanks for the background~

  61. @ DavidB: Awesome Dow/Gold ratio analysis. Will use in my blog tomorrow

    @ Frank: Gold is not just a commodity. It is a currency.

    The Greek

  62. Bruce in Tennessee says:

    OK Iceland is bankrupt…

    http://www.nytimes.com/2008/10/09/business/worldbusiness/09icebank.html?_r=1&ref=business&oref=slogin

    In the spirit of Hank Paulson I have an idea..

    We let Puerto Rico annex Iceland.

    Then hot Puerto Ricans have somewhere to go in the summers, and cold Icelanders have somewhere warm to go on those cold December nights…

  63. wunsacon says:

    ALL HAIL STEVE BARRY!!

    (
    Remember, thou art mortal!
    Remember, thou art mortal!
    Remember, thou art mortal!

    )

    ;-)

  64. Spud says:

    Those charts suck. Come on, do $gold:$spx at stockcharts.

    And no, gold has NO value. It’s nothing but a rock. The only thing that has value is Bernanke Notes. The ones fresh from the helicopter are the best. Bernanke is an EXPERT on the depression don’t you know.

  65. Jeff M. says:

    Dow futures down 203.

    S&P – 25.

    Naz – 24.75.

  66. jail says:

    All money is just a trade/barter mechanism. Gold happens to be more durable and easier to cross borders/cultures than paper of suspect origin.

    Remember the rule, “…exchange of goods and services.”

    It is, however, kinda heavy to haul around in your pocket!!

  67. Adam says:

    Winston Munn, I, too, am scared that we’ll mirror the Japanese. But have you considered that the lost decade was really the last ten years and not the next ten?

    I mean, a flat volatile stock market, a clueless President, a disastrous attack on domestic soil, two failed wars, etc. Maybe the lost decade is behind us.

  68. Steve Barry says:

    Ok…time to calmly see where we are with QID.

    Fundamentally, with the worst crisis since the Depression, you have to think valuations should hit close to their lows at previous market troughs. In 1981, the S&P got to .4 times sales…an average trough seems to be .7. Data I see from Financial Sense indicate it is right at one now, but sales are going to plummet. To be conservative, I’ll use .7 on today’s higher sales for a target of 630. QQQQ would fall at least the same 30% and QID should rise around 60% for a 130 target.

    Chartwise, QID made a stunningly beautiful, bullish multi-year rounded bottom with a bottom of 34. This is the most bullish chart you can get. It appears to have broken out at 58 and that would make the target 82 (which is where we are now). Here’s where it gets tricky…You could also interpret it as a slightly less perfect rounded bottom, using a longer timeframe, with breakout at 80, which also set a new all-time high today. That would make the target 80-34+80 or 126 (close to the 130 fundamental look). Something tells me that is where we are going, not stopping at the 82. I don’t want to get greedy, so I will likely start trimming at prices from 100-125…quicker if put/calls spike or I see MUCH higher short ratios on QQQQ, GOOG, AAPL, RIMM, etc. Then quickly buy some CDs and move them to multiple institutions.

    I cannot watch the market minute by minute, as it is moving just too fast right now. I will re-evaluate after each day and hope QID can continue to perform as advertised.

    That Jeremy Siegel is some quack BTW.

  69. AGG says:

    Many years ago I studied the Great Depression effects on various items like shoes, mosquito nets, clothing, cars, houses, food and precious metals. Here are my conclusions:
    1929-1933 Shoes, clothing and other household durables down 40% plus. Cars and houses 20 to 30%. Precious metals down 10-20% until Gold ownership was outlawed. That’s right, gold went down. However, we did have a gold backed currency and lack of demand as well as deflation caused this. So don’t expect gold to tank now.
    1934-1939 Everything begins to climb .5 to 1% a year (at a snails in mollasses pace).
    The exception to all the above were the gold mining stocks. The prohibition on ownership of gold sent many millions their way. Will it happen again? I don’t know.
    The intrinsic value of gold involves electrical conduction (although copper is a superior conducter, it is subject to oxidation which reduces conductivity) and plating for corrosion resistance. If gold was cheap enough, all wiring and contacts would use it. Gold makes high quality mirrors for use in solar energy products (doesn’t corrode like silver) and has some uses in medicine. Germs simply do not like gold. They die on it so it’s great for utensils if you can afford it. Finally, Gold , Palladium and Platinum have a great future in hydrogen fuel cells because they are very good at separating hydrogen into usable quantities without involving moving parts.
    All that said, remember our currency isn’t connected to gold. However, because of the glitter and history, our “betters” are extremely sensitive to gold prices because it is a known panic indicator. High gold means the people have lost confidence in the government AND the system. So, yeah, some very smart people will bust there tail to keep the price down. If you want to invest for long haul, the best buy right now is Platinum. Look at the chart. Gold mining stocks and gold are good too when the smoke clears in a year or so. At any rate, forget the jewelry angle. It’s the high technology angle that counts now.

  70. CNBC Sucks says:

    First!

    Steve, I am watching that show too. I think it’s horrible CNBC has Mark Haines working too shifts like 11 hours apart. I guess he doesn’t have a choice. And yes, Siegel is a quack — think of all the Wharton grads that guy has put through into the investor pool.

    We all should get used to 4-digit Dows for a while. We will have sucka’s rallies but valuations based on old-fashioned methods are just becoming reasonable now.

  71. Jeff M. says:

    I’m sure some have noticed that the NIKKEI down 914.

  72. Steve Barry says:

    What really is scary is that the market laughed off the TARP and the coordinated cuts…and due to the holiday today, we didn’t get capitulation-type volume.

  73. BlackSwan2008 says:

    BR
    Looks like the Market is getting Marked to Market just like real estate…Isn’t this a good thing????

  74. Marcus Aurelius says:

    Gold: The anti-fiat currency. Those who don’t understand the pan-cultural value of gold, it’s history as money (and more importantly WHY it was used as money), and it’s relationship to fiat currency, only look biased, arrogant and ignorant when they speak against it.

    Gold is not an “investment.” Gold is money.

    I’ll stop holding gold when the central/national banks do.

  75. happy days are here again says:

    When buying a donut, how do you make change for a Krugerrand?

  76. Steve Barry says:

    Vince Farrell will NEVER turn bearish…he’ll just stay bullish and claim he was first to call a bottom.

  77. dmc says:

    Rev 18:8 Therefore shall her plagues come in one day, death, and mourning, and famine; and she shall be utterly burned with fire: for strong [is] the Lord God who judgeth her.

    Rev 18:9 ¶ And the kings of the earth, who have committed fornication and lived deliciously with her, shall bewail her, and lament for her, when they shall see the smoke of her burning,

    Rev 18:10 Standing afar off for the fear of her torment, saying, Alas, alas, that great city Babylon, that mighty city! for in one hour is thy judgment come.

    Rev 18:11 And the merchants of the earth shall weep and mourn over her; for no man buyeth their merchandise any more:

    Rev 18:12 The merchandise of gold, and silver, and precious stones, and of pearls, and fine linen, and purple, and silk, and scarlet, and all thyine wood, and all manner vessels of ivory, and all manner vessels of most precious wood, and of brass, and iron, and marble,

    Rev 18:13 And cinnamon, and odours, and ointments, and frankincense, and wine, and oil, and fine flour, and wheat, and beasts, and sheep, and horses, and chariots, and slaves, and souls of men.

    Rev 18:14 And the fruits that thy soul lusted after are departed from thee, and all things which were dainty and goodly are departed from thee, and thou shalt find them no more at all.

    Rev 18:15 The merchants of these things, which were made rich by her, shall stand afar off for the fear of her torment, weeping and wailing,

    Rev 18:16 And saying, Alas, alas, that great city, that was clothed in fine linen, and purple, and scarlet, and decked with gold, and precious stones, and pearls!

    Rev 18:17 For in one hour so great riches is come to nought. And every shipmaster, and all the company in ships, and sailors, and as many as trade by sea, stood afar off,

    Rev 18:18 And cried when they saw the smoke of her burning, saying, What [city is] like unto this great city!

    Rev 18:19 And they cast dust on their heads, and cried, weeping and wailing, saying, Alas, alas, that great city, wherein were made rich all that had ships in the sea by reason of her costliness! for in one hour is she made desolate.

    If the hour is finally upon us, either tomorrow, or next week, or next month, then I imagine there will be no place to hide. Your portfolio will be worthless if you cannot get your broker on the line to transfer money to you becasue he is out scrounging for food – the pixels will become meaningless. Your cash will have zero value. Your gold bars and silver coins – can you eat them? Can you keep the roving gangs from snatching them from you? In Mad Max world, only three things will have value – access to food, clean water, and weapons with plenty of ammo. Are we headed there? I hope not, but clearly there is nothing Ben, Hank, George or any other human being on earth can do to stop the financial tsunami which has now sucked all the water from the beach and looms just a few hundred feet off shore. Best of luck to all here. dmc.

  78. Caesar Licentious says:

    A little advice for a novice? I have an idea and maybe it’s a little nutty, I dunno, you tell me. Here it is: at the dollar’s tipping point, would it be prudent at that time to max out my credit cards and purchase things that might help get through dire times. Then pay back in hyper inflationary dollars, if in fact the issuing bank survives a dollar collapse. Anyone?

  79. Mel says:

    GM is almost down to the price of a gallon of gas–ironic. I think it’s becoming apparent that bailouts won’t help–a depression is looming and the money will be needed for people, not corporations. In the 30s we had a rural population–this time will be much more difficult.

  80. Steve Barry says:

    Serious question…CNBC Sucks maybe you know…do you think these CNBC anchors are getting paid OT for these long hours? I’d guess no.

  81. Bruce in Tennessee says:

    Caesar:

    No. We are not going to have hyperinflation. Turn and face the other direction…..

  82. bob says:

    You want to read the analysis note below folks as it relates prices of previous bear bottom to today’s price. Found at DB.

    ” Bottom analysis from

    http://marketwarnings.blogspot.com/2008/10/dow-sp500-october-2008-bottom-buying.html

    The market will go UP no matter what world bank leaders will do/say. BUT they will take credit for it.

    Real reason for the bottom (before it is confirmed) at above link:

    http://marketwarnings.blogspot.com/2008/10/dow-sp500-october-2008-bottom-buying.html

  83. Mich(AU1881) says:

    Posted by: Caesar Licentious | Oct 9, 2008 9:25:05 PM

    According to the topic we’re in, not unless you buy gold with your visa… To reiterate, that is buy gold with visa card, not buy stuff with your gold visa card

  84. Caesar Licentious says:

    Bruce in Tennessee, deflation? Can you give me more than that?

  85. Caesar Licentious says:

    ‘To reiterate, that is buy gold with visa card, not buy stuff with your gold visa card’

    Okay, but didn’t FDR seize private reserves in the ’30s?

  86. anon says:

    It feels like there aren’t many people left expecting the selling to stop. I am one of those. I say to myself “Everybody looking at this thinks a bottom is coming because no one is left who thinks the selling will stop.” But I think they’re wrong because I don’t think the selling will stop. I’s left me a little uncertain how to proceed here. Okay, I’m a little stoned.

  87. Mich(AU1881) says:

    That’s why I don’t own gold, that and I don’t trust gold exchanges where there is a counterparty risk. I am going with gold miners, and only those where they have a lot less debt than they can afford.

    If I were looking for stocks, and I have one that I get in and out for quick swings, I would only focus on companies with huge cash reserves and no debt, low pe, preferably an ADR where dollar devaluation “may” also help the stock price.

  88. Bruce in Tennessee says:

    Sure:

    First, we are in a spiraling deleveraging cycle. We’ve had our monetary expansion, and our credit lifestyles..this is ending. Oil is down to below 90 bucks because traders are very concerned there will be no demand for it. The Shanghai stock market is down by 2/3 (look it up) and the idea that the BRIC’s were going to get us through this deleveraging storm was just idle chatter.

    Unemployment is increasing. And in truth, the statistics have been skewed to actually show lower unemployment than truly exists for the US.

    Usually inflation is what economists call a wage/price spiral. Today October 2008 neither condition exists. WalMart has cut prices just to sell its inventory for Christmas. No, this is not Thanksgiving. Wage increases in 2009? Forget it, people will be trying to hold on to their jobs. The burst of inflation early this year was because of an oil squeeze, not true elements of inflationary concern. Note the price of POT, a huge maker of fertilizer. Falling because demand for fertilizer is certainly decreasing.

    Inflation comes about because,as they say, too many dollars chasing too few goods. That won’t be happening next year. Just as the price of automobiles has dropped like a stone because of decreasing demand, so will the price of commodities, the demand for new labor as industry cuts back, and so forth.

    That is not to say you shouldn’t own some gold…but if you are going to make plans, make plans for the air to leave the balloon of industry next year, hence little chance of inflation.

    ..just my opinion.

  89. Confused says:

    One thing I don’t understand about gold: how does it perform when the whole world is crashing? The arguments I see promoting gold are based on the near term weakness of the US dollar. As the Eurozone pours money into their cratering banks, how can the Euro fair any better? The BRICs are dropping faster than the west. The US looks bad but at this point I see no country that’s immune.

    Do the pro gold folks really see it as inflation protection or a way to make some fast money?

  90. Steve Barry says:

    anon…not only does the selling have to stop first, but then they have to find somebody with some money left to invest who will bid higher for stocks to make them go up…and remember there are few shorts to squeeze. A short squeeze would usually kick it off.

  91. Caesar Licentious says:

    Thanx for taking the time to explain that. So deflation first, then inflation the following year? My decision has to do w/ what I should do with my credit card situation. I have lots of room left, but I’ve been working hard to pay it to zero and paying a lot more than the minimum to do so. I just want to know if it’s worth it to continue to do so, or whether I should just pay the minimum considering the sh!t seems to be getting close to the fan, and once that happens, what diff does it make what my credit score is.

  92. Steve Barry says:

    Gold cannot rise appreciably in a deflationary debt crash IMO. It may hold its value as it is priced relative to paper that is garbage or it could drop, but it should outperform stocks and bonds. After the crash ends, as they re-inflate, gold should do well and may even become part of a new monetary regime.

  93. Bruce in Tennessee says:

    Um….I would bet deflation first, then deflation second.

    If you are pulling my leg, ok, but you seem not to have enough foundation to be investing your own money.

    Best first rule, get out of debt.

    Once you are out of debt, then you have money to invest. Not before. Credit card debt? You are in the wrong pew here. I imagine not 5% of the folks here have that.

    If you have credit card debt, you need not worry about inflation/deflation. Your problem has already been defined.

  94. Mich(AU1881) says:

    Ceasar, you SHOULD pay you credit cards and have zero balance. IF one day hyperinflation comes, the interest rates on that card will go hyper UP too.

  95. Knapp says:

    I can’t believe CNBC is explaining the tools that the Fed has left to save the markets! Why do they think the Fed can solve this crisis, when they are the ones that got us into this mess and are only making it worse. Ridiculous. The ordinary person watches this and now depends on the Fed giving them even more power than they already have. Abolish the Fed!

  96. Marcus Aurelius says:

    As anyone who had to flee Europe in the ’30s or ’40s how valuable gold is vs. paper currency.

  97. Deano, Peoria, AZ says:

    That’s okay, chew on this one.
    GM – manufactures autos; stock closed @ $4.76
    Mattel – manufactures Matchbox autos; stock closed @ $14.26

    Tells you what the American consumer is buying into these days.

  98. Deano, Peoria, AZ says:

    That’s okay, chew on this one.
    GM – manufactures autos; stock closed @ $4.76
    Mattel – manufactures Matchbox autos; stock closed @ $14.26

    Tells you what the American consumer is buying into these days.

  99. Deano, Peoria, AZ says:

    That’s okay, chew on this one.
    GM – manufactures autos; stock closed @ $4.76
    Mattel – manufactures Matchbox autos; stock closed @ $14.26

    Tells you what the American consumer is buying into these days.