Four Days in a Row

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.

One thought on “Four Days in a Row

  1. I highly recommend National Geographic’s story, “The Real Price of Gold” if you’re interested in pursuing this. http://ngm.nationalgeographic.com/2009/01/gold/larmer-text“Humankind’s feverish attachment to gold shouldn’t have survived the modern world. Few cultures still believe that gold can give eternal life, and every country in the world—the United States was last, in 1971—has done away with the gold standard, which John Maynard Keynes famously derided as “a barbarous relic.” But gold’s luster not only endures; fueled by global uncertainty, it grows stronger. The price of gold, which stood at $271 an ounce on September 10, 2001, hit $1,023 in March 2008, and it may surpass that threshold again. Aside from extravagance, gold is also reprising its role as a safe haven in perilous times. Gold’s recent surge, sparked in part by the terrorist attack on 9/11, has been amplified by the slide of the U.S. dollar and jitters over a looming global recession. In 2007 demand outstripped mine production by 59 percent. “Gold has always had this kind of magic,” says Peter L. Bernstein, author of The Power of Gold. “But it’s never been clear if we have gold—or gold has us.””

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s