Earlier this week, I noted an odd historical occurrence on January 20th: for the first time since the 1991 Gulf War, the S&P 500 Index — a weighted average of 500 of the largest publicly-traded companies — closed below the price of a single ounce of gold.
I’m still not quite sure what this means, but I’ve continued to keep an eye on these markets. Tuesday, Wednesday, and Thursday all saw the trend continue. And then, today, metals markets really shot up. Gold broke $900 during the day, and closed at $899. Meanwhile, the S&P closed at $832 — a difference of more than 8%. I’ll do a little digging this weekend, but I believe it’s been decades since we’ve seen a spread of that magnitude.
S&P / Gold
January 20: $805 / $856.
January 21: $840 / $854.
January 22: $827 / $857.
January 23: $832 / $899.
Mrs. Yeoman Farmer and I have been sensing for some time that the current situation is different from previous economic downturns. I really hope we’re wrong, but I can’t help sensing that something really odd is afoot out there. As promised in the past, I am preparing a longer post about gold and precious metals; I’ve been thinking about and researching it for some time now. In the meantime…well, let’s just say that I’d encourage all my readers to keep a prudent portion of their savings in truly “hard” assets.
There is a reason that for 5,000+ years gold has maintained its position as the ultimate currency and store of value.