S&P In Real Terms: Down 0.5%

Tyler Durden's picture

Since everyone has now given up on the dollar, and since nominal values expressed in a reserve currency on its deathbed are irrelevant, here is the finally tally for the day: S&P in nominal terms, expressed in dollars: down 0.07%; S&P in real terms, expressed in gold: down 0.5%. Just a slight difference there. Also, since Friday, stocks are up 1.26% in nominal terms, and down -1.05% in real terms. Soon stocks will be up a few million percent nominally, while the dollar will be sold in double or triple ply version. With nobody daring to step in front of the Marriner Eccles madmen, the natural shorts are now expressing their bias via gold. Sorry Bernanke - you lose.


Three day real performance:

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HarryWanger's picture

As I said earlier, and thanks for supporting that, you have to be crazy to be short this market. If you're losing money long, imagine how you'd be getting crushed on the short side.

lieutenantjohnchard's picture

the problem from my vantage of being long in the current depression is misdiagnosing a garden variety pullback from a severe downturn. stops are nice but the reversals kill you trying to chase it one way or the other. then again, we've all seen the numbers showing that roughly 80% (i might be wrong a little on the exact number but you get the point) of the spoos gains have come from overnight risk.

it's simply easier to buy, hold and polish silver coins. sleep easy too.

you enjoy myself's picture

"the problem from my vantage of being long in the current depression is misdiagnosing a garden variety pullback from a severe downturn"

agreed.  and that's why retail is gone from the current insanity.  how are you supposed to invest when a month from now, realistically, the Dow could either be 13,000 or 8,000?  and which direction it goes is based entirely on divining Bernanke's next move. 


homersimpson's picture

"If you're losing money long"... given how you were a cheerleader for the market last year, I'm sure you can tell us about that situation. Once again, your "long" comments are getting more frequent as the market gets artifically and desperately pumped up by a bunch of dumb Keynesians.

HarryWanger's picture

Sorry but been long and short throughout the year. Went very short for a while. Owned AAPL reluctantly for a while. Right now largest positions are in precious metals. I sold all of my AAPL last week at 289. Might buy back in again for a quick trade.

mynhair's picture

Reluctantly my ass, Harry.  You were touting it like a CNBS shill.

Ragnarok's picture

May we get one since March 2009 when QE1 and the destruction of the dollar became the primary policy of the Fed?

honestann's picture

Humans seem to be terminally afflicted with "complexitus", a virulent and often fatal mental disorder.  Otherwise, how can anyone explain why virtually all humans ignore the simple, obvious fundamentals.

In this case, the topic would be "trade" or "exchange" between individuals.  Of course, most humans make a terminal mistake right from the start by labeling this problem as "money" or "economics".

To put it simply, civilized (that is, non-predatory) humans survive and flourish by producing real physical goods (and services), and exchanging some of the goods they produced for goods produced by others.

At first, this system of "exchanging real goods for other real goods" seems to have a couple weaknesses, inconveniences or inefficiencies.

For example, if you want to exchange the eggs you (that is, your chicken) produced for lumber and nails to build a barn, shed or house, you need to exchange for those products a little at a time, as your chicken produces the eggs.  If you tried to accumulate enough eggs to buy all the lumber you need, most would rot before you were ready to trade.  You also need to find a producer of lumber who wants eggs.

This is why wise folks thousands of years ago settled on a single real physical good that never decays to exchange with others, namely "gold".  This very efficient, convenient practice assumes every exchange becomes two exchanges: eggs for gold, then gold for lumber.  Because the two exchanges can be separated in time, number and quantity, the entire process of exchange became extremely convenient and extremely efficient.

Unfortunately, humans are absolute suckers for that terrible mental disease called "complexitus".  So they fell right into the complex traps created by uncivilized humans who decided to live as predators rather than producers (these being the only two ways to obtain goods humans require to live, enjoy and flourish).  These naive fool producers fell for the predator's incredibly absurd scam of substituting various forms of fancy-looking paper for gold.

On the surface, this seemed to work, as long as everyone else was willing to exchange their goods for paper rectangles as well as gold rounds.  Of course, these naive trusting fool producers should have immediately noticed they were trading real, physical, valuable goods for worthless PAPER... and suspected "something fishy here".  They also should have realized that anyone printing up these pieces of paper instantly became infinitely rich, because they could print them at near zero cost, add as many zeros as they wish, and buy any real physical goods from anyone stupid enough to exchange real physical goods for worthless paper.

The rest is history.

The only solution to the near infinitude of paper scams that exist today, and the only way to establish a viable economy, is to reject ALL forms of bogus fictions like paper money, and return to the very most basic fundamental productive behaviors.  All the rest is "complexitus", which only serves to strengthen and embolden the predators-that-be.

prophet's picture

Nicely done.  I think that gold emerged as an exchange mechanism because it was scarce and hard to produce.  Thus one could not get a bunch of it without a whole lot of effort.  That made it trustworthy as a temporary store of value.

If I take the total volume of real transactions that occur today and divide that into the total gold available I would get a very small number.  We would probably be exchanging slivers of gold. 

I think future stability will be through a secure and protected currency, but perhaps not slivers of something that is relatively scarce.  The potential for war and ruin over trying to acquire scarce slivers is great. 

There are many notions out there to look for that are working somewhat.  There is one called "time dollar" and it basically only allows for creation of currency units by the expenditure of time to produce a good or service.  You then exchange those units in turn to acquire a good or service.


LowProfile's picture

Slivers of gold?

Isn't that why we have used silver, nickle and copper?  We could easily again, as long as silver was allowed to trade freely (we should just ditch the base metals and use bimetallic coins).

Time dollar?  "future stability will be through a secure and protected currency"?!  WTF, man, who do you trust to "secure and protect" your "Time Dollar", Fed v2.0?!  Not to be sarcastic or anything, but YEAH, THAT'LL WORK PFFFT.

Sorry, that's wack.  But I'll have a toke of whatever you're smokin'.

Robslob's picture

If you love that write up simply google Fiat Inflation France for a stunning 78 page read on the U.S. right now...oddly enough written in 1933 when all that stuff was fresh on everyones mind.

It has all of the thrillers one could read - Property Confiscation -
Money Printing - Stock "jobbers" and the death of fiat currency in France....right before Napoleon took over.


MrTrader's picture

Gentlemen, I am appealing to every fund manager out there to destroy Paulson´s September performance ! This is an OBVIOUS attempt of "hedge fund" managers like Paulson and others ( David Tepper ) to corner the market ! Throw up !!!!

Note : I did not lose money in the last couple of weeks, but what I hate more than anything is if a group of people is arranging to corner markets !

BobPaulson's picture

That's sort of like hating rain though. An annoying thing that exists since prehistory. Do the umbrella thing.

-1Delta's picture

Speaking of cornered.... US Dollar....

Also Tyler- what is fucking real anymore when the street is specing on 1T or 2T in  QE2.0?

swissinv's picture

Fortunately our great economic system allows me to borrow USD and participating in inflationary growth

prophet's picture

Oil makes for some interesting real return comparisons as well.

Samsonov's picture

Sorry, but the market did not go down in real terms.  Since the start of September, the S&P has risen from 0.88 of my mortgage to 0.95 of my mortgage.  And when I refinance, that figure will leap.

BobPaulson's picture

Like I said to a Japanese friend of mine today: currency devaluation is a game of chicken. Just don't get your coat sleeve caught in the door handle:


prophet's picture

Using gold priced in dollars to determine real rates of return is no more real than using butter priced in Taka.

Last 90 years DJI up about 167X, gold about 64X.  WFC.  Whats the point?


Minion's picture

Last 10 years DJI is up about .2x, gold about 4x.  The point is to hitch up with the slower moving parachute and not hit the ground as hard.

InconvenientCounterParty's picture

There's gold and then there's not exactly (silver), then there's being Bernake's bitch.

Belrev's picture

Why do people assume that price of any security/commodity expressed in terms of gold is 'the real price'? Why do they divide total monetary base by ounce of gold to come up with gold's 'true price'? To be correct, one needs to sum up the value of silver, diamonds, Heinz soup cans, bushels of wheat, cars, toys, bed sheets, barrels of oil - then take that and divide the total amount of fiat currency outstanding to come up with a number that will show that either our fiat is overvalued or undervalued. You cant just run on gold. And why is gold not overvalued? Is not latest run up based on fumes of expectations rather then actual money printed. Can we divided QE lite delta dollars so far by ounce of gold out there to see if gold is running ahead of itself. What if sentiment changes and suddenly it is no longer $1349 per ounce, but rather $1100?

mynhair's picture

My old soup cans are worth something?  Dam, I'm starting a soup kitchen then!

prophet's picture

Oh I get it.  The point is that if you want to make dollars you could make more buying gold than the 500 largest capitalized US stocks.  But why would you want to make dollars when you know their value is going to decline.  Perhaps, one is trying to make so many of them that they overtake the rate of decline in their value.  But we know the more you make the less they are worth.  It seems like its all the same broken logic and flawed economic system.


Sudden Debt's picture

I did some calculations on the true value of silver and at this moment, silver should be priced at +-42,8$ per ounce.

I did this by compairing the 2 reichmarks silvercoin (62,5% Au)

vs. the dollar in the 1924 (1$ = 4.2 Rm)

The dollar in those days had a purchasing power that was then about 20 times higher then now


The 2 reichsmarks from the 1924 era now has a silver value of +-9$

so: 1/4.2 x 9 x 20= 42,8$


Imagine what the price will be after the QE2! What if the dollar lost another 30%  of it's value because of it! That would make silver go up another 13$!

So after november, we should start to go to 56$ for 1 oz of silver!

For gold that would set the price X2.5 = 3290$ PER OZ!!



The Reichsmark was introduced in 1924 as a permanent replacement for the Papiermark. This was necessary due to the 1920s German inflation which had reached its peak in 1923. The exchange rate between the old Papiermark and the Reichsmark was 1 RM = 1012 Papiermark (one "trillion" in US English, one "billion" in British English, German and other European languages, see long and short scales). To stabilize the economy and to smooth the transition, the Papiermark was not directly replaced by the Reichsmark, but by the Rentenmark, an interim currency backed by the Deutsche Rentenbank, owning industrial and agricultural real estate assets. The Reichsmark was put on the gold standard at the rate previously used by the Goldmark, with the U.S. dollar worth 4.2 RM.

-1Delta's picture

U r presuming there is somebody left to short the dollar lol

SheepDog-One's picture

<A man with a red tie from a bank rebuked the FED's efforts to regulate the Bernanke>

Bose Einstein OracIe's picture

Gold. You can't eat the shit but it sure does buy a lot of food.

Diogenes's picture

You can't eat paper either but you can wipe your ass with it.

99er's picture

(Reuters) - Selling the dollar has been a one-way trade of late as the Federal Reserve looks poised to pump more cash into the economy as early as next month, but the bulk of the impact of extra easing may now be priced in.


JackES's picture

gosh, I wish I could have bought more in dip

Bose Einstein OracIe's picture

Dont worry, Ben will give them their own helicopters equipped with dollar bill blowers til people start spending their trillions.