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S&P-To-Gold Ratio: On Verge Of 1.00 Breakdown
As the attached chart demonstrates, the S&P may soon take out the 1.00x ratio to gold price per oz. With the IMF facilitated Greek bailout, the euro is now a sideshow and nothing more than a political corpse in the hands of a few million Nordrhein-Westfalen voters next weekend. That a bailout of a country can hinge on whether the already indicated German majority (59% oppose the Greek bailout at last count) can manifest itself in the decisions of the weakest link, should be enough for even the biggest skeptics to bury their dreams of euro viability. And as we have long pointed out, what is the alternative - massively overpriced and overbought stocks, where a jittery market can wipe out 10% in flash, the dollar, which will certainly soon suffer the full wrath of its natural born killer, the Federal Reserve, or industrial commodities, where oil is trading at prices that boggle the mind when considering the record inventories lying around, not to mention that China's rapidly changing liquidity policy may soon take make the lives of copper and other longs a nightmare. We are confident that gold, which over the past two weeks has been a one way ticket higher, will continue to strengthen, and once the 1:1 parity with the S&P is broken, the next resistance level will be in the $1,300's.
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so is TD a gold bug? On the one hand, he's a big deflation guy, but this site does promote gold to no end.
Gold is money. In deflation, that's the most important thing to own.
Gold is mooonie. Couldn't help it.
i'm an inflationist. however, i think the deflationationists are right. you just to add in gold to what ever they say.
Gold is a risk asset one actually flees to.
It is a liquidity sink in good times.
It is a store of value in bad times.
Ones goes to gold when the system is under stress. One stays in gold when the stress has been relieved using ZIRP and QE. Show me trust and the truth I will sell my gold.
Very well said. My sentiments exactly.
Hmmmmm...this clip looks vaguely familiar...oh, yeah!...
Located 153 miles northwest of Dutch Harbor is the Cornelia Marie...
+1000 Ophelia
Personal income up nicely on the transfer payments with the savings rate now down to 2.7% from a whopping 3% last month. As they say not everyone can save...
when people figure out that all the problems wrought the pigs were delivered by the us controlled ratings agencies in order to avoid a treasury auction bust then gold will take on a new shine. with greece rated junk the next distraction, when required, will be portugal.
when the treasury runs out of pigs the jig will be up for treasuries and up up up for gold and silver. forget gld and slv. go physical.
Exactly. Very well said.
And there you go. Your Monday AM bugfest. The title is kind of like a fresh femur falling into a tank of scarabs -
"Bring out yer bugs, Bring out yer bugs"
I'll tell you one thing - I like shiny metal as much as anyone and don't get why anyone cares if JPM shorts the market. All I can tell is that for those who take physical delivery, it is a gift from on high.
Gold is a gift under $1500. You are absolutely right about physical.
Wait until dow/gold ratio goes to 1.
I was thinking the same...where will they meet is the question.
Since I believe that as well...I'd rather the markets go up endlessly
Two years...that is if they CAN get this oil spill under control.
When assets are sold to meet margin calls, gold is at the head of the line. Nobody is talking about the 25 Maple Leafs you have buried in the back yard. The paper guys run this game and the price of "precious" is going to follow their fate, not yours.
Unwind the paper leverage and physical price will rise. Paper price down, physical up.
@tough guy
Just like other markets -- when everyone gets in line to sell, share prices go up? LOL
Sell to whom? Who will buy the paper gold that can't be delivered? Default is the endgame when paper can't buy physical.
Sure. See you in cantango.
Agreed...investors will have another great chance to purchase gold and silver when the equity and corporate bond markets have another swoon.
And you know they will swoon, if not soon.
Actually Wilco, when Governments start taking physical out of the system, the game the paper guys play is over. Yeah HSBC and JPM can sit on the price, until Cent Bank sales dry up, and Saudi, France, China and others start lifting physical. Then the paper game is toast.
Well said Rogerwilco.
Sadly true, me thinks.
During the 2008 takedown, gold /silver was trading at large premiums to the COMEX prices. Those who bought then are laughing today. It won't happen again. Too many with their hands open praying for lower prices.
Think that's bad? Take a look at chart number 135 on the first page of my charts. It's the 30yr bond to gold ratio:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3585763
What a great job!
Oil in its 'at the pump' price in the UK is selling at record high levels now. What will that do to any pretence at a recovery?
First of all, there is no 'recovery' (but you know that already).
Second, just try driving a very, very fast car straight into a brick wall. That should be a good approximation.
Of, for a more graphical perspective:
http://www.wreckedexotics.com/newphotos/exotics2009dec28/4cayenne_200910...
http://www.wreckedexotics.com/newphotos/exotics2009dec14/m3_20091210_100...
No shit... If the quality of these german cars is any indication for the quality of the german economy, there should not be too much to worry, even in case of a head-on impact. Looks like at least the co-pilot might have been able to just open the door and step out. You got to wonder what that impact would have done to an american car.
Merkel saying may have to be treaty changes..
without asking the people I bet!
Well, the changes might be to toughen the rules rather than lightening them up, I reckon - promises is the least she can do if she wants to get around a hypothetical accuse of treason.
asking the people??? that would actually form our rotten system into a democracy are you crazy?
so the reason to own gold, silver, oil et al is for "the super spike." Everyone is pining for another Katrina event...and it's now more possible than ever based on the total annihilation by governments of their national economies. "We have to destroy the country to save it." In other words any rational participant in the marketplace is now forced to at a minimum by GLD because the "powers that be" exists "because we're coming after you instead of them." Don't assume malice when all we're talking about here is "mere incompetence." That's what "great" about gold: it's the ultimate "unintended consequence." And now we have Europe...and Europeans want in a panic....
I don't understand the SPX vs Gold, because the two aren't even vaguely similiar. I use the DOW versus the XAU, and the XAU rather than the GDX only because it less speculative, and has a history. Since 1996 the XAU has lead the market, in 96 it fortold the market crash, in 2002 it diverged higher, leading the market. Gold stocks are better for correlation purposes. Secondly I don't use bar charts, I use Point and Figure, to flush out the noise. Reading these things is tricky because the ratio doesn't require that either component be nominally higher, or lower, for the ratio to rise of fall. One might rise or fall faster than the other. Gold stocks also reflect inflation, as the intrinsic value of gold tends to remain the same, its the costs associated with owning gold, and bringing gold out of the ground, which vary.
If the dollar rises, even on technical factors, that might not bode too well for gold, and the stock market.
Mining shares are for suckers.
when the fiat currency system collapses gold in the ground will as valuable as oil in the ground is today, and gold in your pocket, like gas in your gas tank today, will provide only the most fleeting comfort.
Mines will be stolen nationalized - 100% guaranteed.
and you buy the country with the most gold reserves in the ground, relative to their currency float, and with a functioning political system. financial centers will pop up in the most unlikely places., did anyone 100 years ago imagine the UAE would hold so much of the world's wealth? every nation in the world except one has nationalised their oil. That's an irrelevant argument. It only matters if you want to hold gold personally, like if you had your own personal gasoline storage tank. Why?
...regardless of whether or not the mines are nationalized, buying mining shares is not secure. for example, when you want to sell your shares, you are first dependent upon your broker to forward you the frn$ at which they sold. secondly, you are dependent upon the great federal government regime to allow you to keep what capital appreciation you have realized (after capital gains taxes, windfall capital gains taxes, and whatever other wealth confiscation scheme they can conceive)...
i trust what i hold in my hands...
$100,000/ounce+ baby! It's coming folks.
Jesus Gordon do you really want that to happen , I prefer a 30% yearly gain for a decade or more.
I want to be able to spend my money in a functioning society - I don't want some feudal lord busting into my house - raping my women and stealing my Gold
Actually what's coming is total and complete destruction of the present day economic and financial system (and it isn't a bad thing - think of it as nature's cleansing process much like a forest fire clears the dead and rotten wood for new healthy plants to grow) - gold's upward revaluation will just be a manifestation of that cleansing process.
I don't like being caught in a forest fire - I may not be part of that forest ecosystem but I will be burned alive none the less.
Such a rapid transfer of wealth would be extremely destabilising and would just lead to violence on a biblical scale.
Lets just glide into this, I feel no need to do a Chuck Yeager and go into a ballistic trajectory .
www.youtube.com/watch?v=jlsWD1-fmIk
I don't think you (or I) get much of a choice in the matter. While we can hope for something manageable, it seems just as likely that this crash will be the end of the modern global financial system, and potentially with it, the end of our current civilization.
There is a reason that preppers urge folks to move to rural communities and invest in the 4Gs (guns, gold, grains, and gear). Heck, there are even major financial analysts writing books urging the same thing now.
...the strategy is the complete dismantling of our capitalist system...deny at your own peril...
http://www.youtube.com/watch?v=xvJJP9AYgqU ***he said it in broad daylight.
http://www.youtube.com/watch?v=aiaLnQvy7_w
http://www.youtube.com/watch?v=-g6SpnTcMx8&feature=related ***cloward and piven strategy
http://www.youtube.com/watch?v=LX0B4xlt9Qg ***alinsky is in the house
...Gott mit uns...
From my pov, the bible's scale was only for the mid-east. Not much of a scale really.
I know that is a common term but it strikes me as misnomer.
The devaluation will be much larger against gold than against anything else. So far gold longs have only preserved purchasing power against fiat currency, but in the devaluation they will gain actual wealth against real goods.
@tough guy
How exactly do you go about buying a chicken with a 1 oz. Maple Leaf coin? Just wonderin'.
Transactional currency will remain, it will just be devalued against gold. Sell gold for devalued money, buy chicken, have devalued money left over.
lol, that's like asking how you are going to pay for anything when you have a million dollars in your bank account.
I've said it before, and I'll say it again, slightly modified for the particular inane situation. If you want to buy a chicken, you can use a small amount of silver. If you only have gold, then you'll just have to settle for buying the whole farm, a year of labor from all the workers, and a few nights with the most attractive of their wives/daughters.
Now that's what I'm talking about!!! Gold and Silver Bitches!!!
Who's talking about buying a chicken with 1 oz. when I can buy my own state with that - LOL!
Shave baby, shave. :)
How do you go about buying a car with paper promises? How do you go about buying a house with unearned money? How do you go about using a credit card with a complete strange across the internet from another country?
And gold is your issue?
Hey, how about a walk to the local butcher.....doo be doo.
"Hi Mr. Butcher, you remember the days when none of us crack pots would tip you? Well make sure I am giving you 15% off of MY TAB. Yeah, it is a silver coin again! I know, worth ITS WEIGHT..heh heh. What are "credits" going for? I do not know. I stopped paying attention to those foolish bankers a while ago. I know, and I am so glad everyone finally caught on. It was time anyway. I will be back tomorrow! You will be seeing a lot of me. This summer, we are going to Bar Be Que! Woo!"
Long as we still have a civil society, I'll have to join you for drinks (care to try Italian absinthe?) if gold even gets to $50,000.
I'll even pay. Although if we can round up Chumba maybe he should, as he is nearly 100% in gold.
Now that I am back, it's now time for more gold and ammo while I can get it all cheap.
You're on.
Gold has to get to $50k an ounce for you guys to have a drink? LOL! @ $1500 I'm going to have a bender!
I'll have to take you up on that drink. Gold,5.56 and 7.62. All the cash you'll ever need.
Welcome to the fiesta!
Gold, 9mm (my case), 7.62x39, some FRNs that are going to change into PMs soon, and the Italian absinthe I am dying to try ASAP!
Would you happen to know if these new absinthes coming out of Europe still have the "bad" compound that Toulouse-Lautrec (etc.) so much enjoyed? My 140 proof emerald green Italian absinthe is just sitting up there, oh so close, begging me to partake...
@ gekko
And the tax levied on transactions will be 99.9%. Do you honestly think they will let those kinds of windfall profits stay in the hands of the little people?
Black market rules for physical. There will be an unvavoidable windfall profit tax on miners.
And do you honestly think anyone will pay that tax?
@hansel
This is where the "I've got physical!" narrative breaks down. When you look at the reality of exchanging physical metals in barter transactions, the limitations are obvious. If the economy deteriorates to the point where we need to trade physical gold & silver, we will be living in anachy or a police state. In anarchy, people will guns will rule. They will kill you and steal your gold. In a police state, the authorities will make it illegal to use metals or simply tax it's utility to the point of uselessness. I hear brave talk about black markets and such, but the vig in those deals is huge as well.
Apparently, you've never bought anything from a black market. They exist already. Some even deal in PMs already (though that is very rare).
One characteristic of economies with active black markets is the paper currency gets changed on a regular basis. I'm not saying black markets don't exist or that they won't work -- they obviously do. But the notion that someone could suddenly become a land baron because they had some gold buried in the back yard is far-fetched at best. Every transaction has a cost, and risk must be rewarded. A guy facing the death penalty is not going to have much sympathy when he exchanges paper money, a border pass, or sells a gun to the guy holding some shiny, illegal coins. Protests of "My Krugerand is worth twice that!" will likely get you a good laugh or a slap on the side of the head.
Replace gold with dollars and reanalyze your thoughts.
Small black markets may not be very efficient, but large ones are VERY efficient. There are plenty of elderly, starving landowners in collapsed economies like Zimbabwe that would gladly hand over their farms for an oz or two of gold. They could then move to the city (or out of the country) and live quite well on that. If you think you are paying too much for black market guns with black market gold, you can just go to the next guy. There are lots of people with guns to sell, just like there are lots of people with land to sell. When they need to move somewhere closer to the city because they can't afford their car anymore, and neither can anyone else, it will be quite simple to become a "land baron".
If you actually go to economies that are 99% "black" you will see quality paper exchanged all the time. It used to be dollars... then Euros... now Swiss francs and Cando.Aussie are widely accepted. The market adjusts quickly. Even in a dire situation you'll be able to trade physical gold for quality paper like SfR. Or exchange Gold for bags of junk (pre-1970s) coin, which will be an acceptable trading medium. People will always find a way to trade above and beyond pure barter - - and gold/silver will work quite well.
pot and a few other drugs= black market
RW, thats why many of are armed,trained and have food stocks, otherwise known as being prepared. To maintain a police state, there has to be money. Right now, the number of police is being devastated by budget cuts across the country.Crime in those areas is skyrocketing.
In a complete financial collapse, like the one we were hours away from in fall of 08, police would probably just go home and protect their families. Martial law could only cover small, predefined areas of the country, DC, etc.
The rest of the nation would be a fucking war zone. people - food = calamity. Don't think our politicians would let this happen? Don't think our politicians aren't prepared? Take a look at Bush II's Texas ranch/compound
To conclude, when many of us state we have PM's, its actually a full package deal....
Two words - Black market. I suggest you visit one of these "developing" countries we keep hearing about so much cuz we are headed there.
And while it is possible that it will be a black market it doesn't necessarily have to be. Just using Disney Dollars as an example, or Starbucks, or casinos...they all have their own "currency" that can be exchanged for fiat presently. But if those were "gold" it would be just as seamless a transaction.
There was just a bill put up for legislation in some state which will allow for silver to be accepted as currency. If I find the article I will link it.
The point is, there should be competing currencies anyway and there already are. I choose PM because they have just a bit of history...like 5000 years.
Are you reporting? Wake up man, we're talking about Amish rules here.
End game has to come soon surely? Talking to a gent that deals in physical and he was saying that he just managed to get an amount of 5kg bars (Ag) out the refinery - 1/4 pre sold and the remaining 3/4 sold shortly thereafter. He also had no idea as to when he'd be able to get any more 5kg bars. He'd sold out of Maples (Au and Ag) and didn't know when he'd be able to get any Maples (Au) but was hoping to get them in Ag this week. Supply seems to be getting tighter and more and more people are waking up to the idea of holding physical "precious".
@Odins
Like the "end game" that was coming 18 months ago? IIRC there were all kinds of stories about people unable to buy coins and bars. What became of that "shortage"? When a mint can't fill its orders due to limited production capacity, it does not mean there is a shortage of the metals.
There's only one way to truly know and that is to have the raw data on inventory. I don't have that. So I have to look at what I can see, and what I can find out.
I know that the prices are continuing to rise and that my local currency's purchasing power is decreasing. I know that supply of precious is getting tighter. I also know that there are a large number of wealthy people purchasing right now - some looking at high volumes of Ag and small amounts of Au.
I also know that if prices continue the way they are, people like me won't be able to afford Au and will switch to Ag.
I am informed that 5kg bars of Ag are currently (and will continue to be) hard to get hold of. Currently 1kg bars have reasonable availability. Who affords 5kg bars? And what happens when they switch to 1kg bars?
I don't know the future, but I really don't like what I'm seeing right now.
I wonder if you are old enough to remember the Oil Embargo? The price controls imposed by the government created lots of shortages everywhere, even though thee was always new supply coming in.
Above ground inventories of silver are almost gone. The shortage back in 2008 was a symptom of that. There will be more. Many more.
Gold now 900 euros.
Was £810 (London price) for Krugers earlier (~13:00 BST). Bets on how long before it goes parabolic?
Remember everyone:
Au and Ag are not a means of wealth accumulation or preservation but the OBJECT of wealth accumulation and preservation.
We are getting ready to close on the sale of U-96 - I have rejected three offers in fiatscos but am considering an offer in Ag and Au bullion - we are negotiating strike prices as we speak.
Simple rule - I am buying physical Ag and Au in a 16:1 ratio with excess cash flow.
Also, setting aside other funds for 7.62x39 (belt feed and loose) and other necessities...
KrvtKpt laughing swordfish
DKM Trading Division
Rambo and Mad Max are entertaining movies. Lots of brave talk here about gold-n-guns for the day TSHTF. How many of you have ever tried to stay awake for 48 hours? I'm not saying PMs don't have a place, but come on, get a grip.
Mad max never happens. What does happen is the currency devalues, and everyone gets poorer. Look at Argentina, Zimbabwe, etc. Think it can't happen here?
Yea it's funny how Fiateers (like mousketeers) ignore obvious and recent examples of what not may happen but does happen as a repeating theme throughout history.
Those of you accumulating physical gold and ammo in preparation for armageddon are, I hope, also spending some fiat currency to assemble a gang as well. When push comes to shove, I'll take 200 hungry guys with families and tire irons over a pile of yellow metal and a couple AK's, thanks.
And those 200 hungry guys will eat you when you can't provide food to them.
You think a couple hundred guys with families and tire irons are going to be able to take out even two guys armed with semi-auto rifles? It would be a bloodbath.
You saying you want to be one of the slobs with tire irons? I'd rather be one of the guys with the AK's, thank you very much. Not only that, but my friends, family, and neighbors make for good backup.
@tmosley
Have you ever seen the old Twilight Zone episode titled The Shelter? In about 20 minutes Rod Serling shows us why all the gold bugs, bunker builders, and dried-food stockpilers are truly screwed if the day ever comes when TSHTF. Check it out
Right, so don't prepare and just starve to death. Don't save real money and be brutally poor. Don't have any weapons and try to steal from the better prepared while armed with a hammer and a tire iron.
I guess it's time for me to go long mass graves for you and your ilk.
Thieves will be shot. Beggars will be put to work (and fed for their trouble). It is easy enough to feed your whole neighborhood when you control the capital and have a mind to do so.
I'm with tmo, Roger. I'd rather have my gold & my AK than NOT have them.
Insurance..., just sayin'.
@tmosley
The point of Serling's story was that being prepared for a disaster doesn't isolate you from the rest of the people in the neighborhood. The guy who was "wise" and built a bomb shelter never counted on an angry mob demanding that he let them in or else.
Now you can pretend to be Rambo and spew BS about AK this and StreetSweeper that, but for 99% of the population with no tactical training or experience, trying to fight an angry mob will end in lots of dead people, themselves included. The have-nots will band together and take what they need to survive. The only way to survive that kind of anarchy is by joining a group of like-minded people. That is 180 degrees removed from the macho, lone-wolf, gold/guns/food BS plastered on boards like ZH.
Roger, Wilco. I already live in an isolated setting (just don't care much for most people) but even if I bought out the local gunshop's inventory, I can't imagine defending this place 24 x 7 from all compass directions. Much of my long-term savings is physical silver but stored in inventoried vaults, not under my floorboards. I realize I am gambling on a limited collapse leaving enough civilization intact that I can redeem my investments. I could be wrong and if so I will be toast, but I don't see any realistic way to bet on armageddon. If the doomers turn out to be right they will have earned the last laugh; I will probably not hear them.
It is foolish and preposterous to bet on armageddon. Physical gold is a bet on controlled collapse... and the guns are the means by which we ensure two things: 1) We halt the collapse at stage 3. (Destablization, with order restored fairly shortly in a reorganized form.) 2) We survive the collapse. To outrace hyenas, you need not be the fastest. You simply need to be faster than the next guy. I do not need to be the hardest guy in town, I just have to be a harder target than somebody else with spoils that are unprotected. Looters are not idiots, and the moment of pause offered by being faced with deadly weapons fire allows for a certain rationality to set in. "This shit ain't worth it, move on." And, ultimately, I hope to only have to be that guy for 1-5 days. Katrina or LA riot duration social breakdown. Survive with solid currency, basic supplies, and safe shelter, and you're in good shape. If it lasts longer than that, then yes - we've entered the age of warlords, and it's time to form a gang (or join one). There's no way for one man to stockpile enough supplies to stand off a determined mass attacker.
That's why you fire your deadly weapons at the determined mass attacker, like in a movie, because you would only see something like that in a movie. Only idiots will try to eke out an existence in urban areas anyway. People think supermarkets will start to magically fill up with food again and that their dollars will still be accepted after a collapse. It's fucking over. If you can't produce your own food you die.
The only ones that will survive a total collapse are the small towns that focus on self-sufficiency and mutual defense. Mass crowds won't have enough supplies to make it out to those areas because they will be on foot - major roads will turn into parking lots.
just like the population of Rome collapsed from 1 million to a few thousand once the food distribution collapsed with the rest of the empire. the peasants will have to grow their own bread, there will not be time for circuses.
dlt
No, just trying to make a point--and one that's quite valid where I live, although I would venture to guess you don't live in a neighborhood like mine.
Personally, I am long Western civil society. This has been a good long-term position--despite challenges that, in objective terms, looked far more serious than the ones we face now--for the last 5 centuries or so, and I expect it to continue to be for a while yet.
DOW/SP500 intra day chart gives bullish signal.
Interesting ...
MARKET UPDATES:
http://www.zerohedge.com/forum/latest-market-outlook-0
Can someone explain to me why it makes sense to express SP in ounces of gold or barrels of oil?
How about French baguettes? I love French baguettes. Or how about acres of land in Saskatchewan?
Because gold is of steady supply unlike either fiat currencies (ever inflating) or other commodities (which are subject to supply gluts or shortages). Since the supply of gold is more or less set, it makes a nice, steady ruler against which to measure the relative values of other things. French baguettes vary in size, quality, and quantity, and land varies in value according to what is on it, in it, and what flows over it. Gold is just gold.
It is just a way to see where you are better off investing. Like everything else, there is a time and a place for everything. It so happens that for the past ten years you would have been better investing in gold and gold mining shares than anything else. This is so now... till it is no longer.
The SPX to barrel of oil ratio is poised for a big move soon. It has been converging towards 14 for about a year.