Just a Couple More Numbers

A quick follow-up to a post from earlier this week, about the increase in sales of firearms and ammunition. Not only do the sales numbers appear to be real…but they’re having a real impact on the value of those companies. Most gun and ammunition makers are privately-held corporations, but two in particular are publicly-traded.

Sturm, Ruger and Company (RGR) closed today at $10.32. It opened the year at $5.97 and was at $6.02 on Innauguration Day. Since the innauguration, it has increased 71%.

Smith & Wesson (SWHC) opened the year at $2.27. The day Barack Obama was innaugurated, it had inched up to $2.45. It closed today at $4.43. That’s an increase of 81% since Innauguration Day.

By comparison, the S&P 500 closed today at $683. That’s a decline of 15% since the Innaugural.

And, to follow up on my previous post about the price of gold: the spot price of gold exceeded the value of the S&P 500 on Innauguration Day (for the first time since the 1991 Gulf War), and has remained comfortably ahead of that index ever since. The two were at a rough parity on January 20th; one ounce of gold is now 37% higher than the weighted average of the 500 largest publicly-traded companies.

I don’t offer investment advice on this blog, and I’m not an economist or financial analyst. And I didn’t have the foresight to buy stock in either of the gun companies above. But I think these trends are fascinating indicators of what’s going on in the marketplace — and in the sentiment of this nation’s investors. And the ways in which Americans are now “voting with their wallets.”

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.