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Long Term Charts 2: Western Markets Since The Middle Ages

Tyler Durden's picture





 

We previously examined 240 years of US market history for a sense of 'trend' or sustainability but some were not satisfied. In order to get a truly long-term perspective, we reach back 1000 years to The Middle Ages and look at how stock prices, interest rates, commodity prices, and gold have changed in a millennia (and most notably how the key historical events have shaped those price changes).

 

Western Markets Since The Middle Ages

 

Stock Prices

 

Interest Rates

 

Commodity Prices

 

The Gold Price

 

@Macro_Tourist for these increble charts

 

And just for good measure, perhaps the most important chart going forward -  Nothing lasts forever... (especially in light of China's earlier comments )

 


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Sun, 02/09/2014 - 16:36 | Link to Comment Black Forest
Black Forest's picture

I like ZH. Thank you.

Sun, 02/09/2014 - 16:37 | Link to Comment Arrowflinger
Arrowflinger's picture

Middle Ages? The reversion to MEAN will be.

Sun, 02/09/2014 - 16:52 | Link to Comment asteroids
asteroids's picture

There is no reversion. The thing that's scary is the near verticle of stock prices. The chairsatan has made this happen with a doubling of to stock market within 5 years.

Sun, 02/09/2014 - 17:02 | Link to Comment Xibalba
Xibalba's picture

What kind of system forces the poor to pay for the mistakes of the rich?  A medieval one.

Sun, 02/09/2014 - 17:09 | Link to Comment So Close
So Close's picture

No chart that shows how many logs one man can cut in a hour, or how far he can travel in a day, or how many people can be reached with a thought in a month?

Sun, 02/09/2014 - 17:26 | Link to Comment BTFDemocracy
BTFDemocracy's picture

No chart showing Bitcoin or Dogecoin price/value.

Sun, 02/09/2014 - 18:43 | Link to Comment Ag Tex
Ag Tex's picture

The most recongnizably absent chart here is silver.  Historically, silver has had much greater purchasing power and value than gold.    Just a short 150 years ago, silver had greater value than gold.

 

Many kings' coffers never had more than a 1,000 ounces of  silver in them.  The Barbarians declared they would not attack Rome if the Roman government would relinquished a 1 ton silver payment to them.  History is filled with many such examples.  Pity none are mentioned here.

 

Here is an excellent article on the history and demonitization of silver and how it was used to destroy the far eastern economies. 

 

http://www.silverbearcafe.com/private/01.11/silverstealers.html

 

"Now, all of you know these changes are necessary for a very simple reason--silver is a scarce material. Our uses of silver are growing as our population and our economy grows. The hard fact is that silver consumption is now more than double new silver production each year. So, in the face of this worldwide shortage of silver, and our rapidly growing need for coins, the only really prudent course was to reduce our dependence upon silver for making our coins.  If we had not done so, we would have risked chronic coin shortages in the very near future."

"If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content."

 

Lyndon B. Johnson “Coinage Act of 1965" — the act that removed silver from U.S. coins

 

 

 

 

 

Sun, 02/09/2014 - 19:28 | Link to Comment are we there yet
are we there yet's picture

Prior to the last few decades silvers bigest consumption was silver iodide in photography.  That consumption is all but gone now with the dominance of digital photography.

Sun, 02/09/2014 - 20:25 | Link to Comment ncdirtdigger
ncdirtdigger's picture

The silver iodide was recycled whereas those digital photographs are taken with cameras and cell phones which are made with about a third of a gram of silver in each. Making recycling of the silver in them not a viable enterprise.

Sun, 02/09/2014 - 22:19 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

I was nine years old in 1965.  Too bad I never had heard the expression "back up the truck" back then.  I would have done very well.

"Junk" silver now retails at some 16 - 17 times "face" value.  It has gone up MUCH faster than inflation since LBJ took our silver out of our money...

Mon, 03/03/2014 - 05:29 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

This close-up shows otherwise

http://flic.kr/p/enJ7Cs

Sun, 02/09/2014 - 16:42 | Link to Comment lynnybee
lynnybee's picture

five years ago i didn't even know how to fill out a check for paying bills.   NOW, I LOVE CHARTS !  

Sun, 02/09/2014 - 16:49 | Link to Comment Miffed Microbio...
Miffed Microbiologist's picture

I do too lynny. It really puts it all in perspective doesn't it? Love your avatar BTW, always makes me smile to see that pretty parrot. I took care of my neighbors 40 parrots once. They really didn't like me much and were very happy when their mom returned.

Miffed;-)

Sun, 02/09/2014 - 16:44 | Link to Comment TuPhat
TuPhat's picture

I think I see manipulation in gold going both directions since 1970 or so.

Sun, 02/09/2014 - 16:52 | Link to Comment Ham-bone
Ham-bone's picture

 

 

I have no idea which way stocks are going, but let’s make this simple for gold
 
2013
 
Demand
= 4500 tons
 
Supply
= 4500 tons
Mining = 2200 (+ 700 tons China/Russia never brought to market)
ETF’s, etc. = 960 tons
COMEX = 100 tons
SCRAP = 1400 tons  (I'm rounding...so don't sweat the slight differences adding all this up...)
 
’13 delta between mining and demand of about 2300 tons…this was made up by ETF / COMEX outflows, scrap sales (everything phyz supplied not mined)
 
If demand remains about constant in ’14…where will the 2300 ton/yr supply come from to make up for this shortfall???
 
Mining = +100 tons/yr
production will peak in ’14 before beginning to decline in ’15 (due to defunded exploration and cap-ex, shut downs/slow downs of marginal mines)…if price falls further, mining output is likely to go negative
 
ETF’s, etc. = +0 tons/yr
if prices remain @ current, no further disgorgement is likely after ’13?s 30% gold price decline and 1350 tons to 790 tons (40% drawdown of GLD, largest holder of bullion)
 
COMEX = 100 ton outflow in ’13 was a 90% decline in deliverable and overall decline of 35% total holdings…
 
Scrap = 1400 tons in ’13 likely to continue falling by 100 tons/yr @ these prices…(scrap supply has been falling from peak of 1750 tons/yr in ’09)
 
Net Net – ’14 @ current prices w/ continued demand faces a shortfall in supply of 2300 tons (50% of total demand)…if prices fall further, mining/scrap supply will fall in line with ETF / COMEX disgorgements…
 
Ummm, seems the game as we’ve known it is over…get ready for something shocking to happen soon.
Options are:
1- prices rise to increase supply…but this cannot work as ETF’s will be large buyers as well…mining incented, scrap sales rise but ETF / COMEX would likely need be large buyers of new supply…delta remains.
2- cut demand in half. this seems most likely??? Otherwise gold market breaks to new highs, previously only the stuff of gold bug letters.
Other options???

Sun, 02/09/2014 - 16:51 | Link to Comment Winston Churchill
Winston Churchill's picture

Easy peasy to cut demand in half.

Nuke China and India . Oh wait

Sun, 02/09/2014 - 17:03 | Link to Comment Ham-bone
Ham-bone's picture

seriously, I'm no expert, have no PhD, am a product of America's sub-par educational system...so I must be missing something really obvious because to me this looks like the biggest no-brainer for a systemic shock I've seen in my lifetime...someone tell me / show me how I've got it all wrong cause I feel like the Zoolander clip of Mugato...is it just me or is everybody in the world taking crazy pills???

If demand isn't nearly cut in half and/or price doesn't rise significantly to bring out supply...then isn't this market no longer a market and no longer indicitive of anything but central planning...are we there???

Sun, 02/09/2014 - 17:04 | Link to Comment fonzannoon
fonzannoon's picture

Yes

Sun, 02/09/2014 - 17:19 | Link to Comment Ham-bone
Ham-bone's picture

only way I see to cut off demand is to cut off China (they are somewhere around 50% of all demand in '13)...but they hold the T's and and must be appeased until the dollar system is taken down to be replaced by whatever...maybe China has already been paid in gold for all the T's they've been buying???  But China shows no signs of slowing and seems there isn't anything near the supply to meet Chinese growing demand??? not to mention all the other global buyers.

Gold is 'tween rock / hard place where something must break...demand crushed or repriced to the moon...

Sun, 02/09/2014 - 17:31 | Link to Comment Professorlocknload
Professorlocknload's picture

A major liquidity crisis could hammer demand. Especially one beginning in China and spreading.

Might even make for some bargains.

 

Sun, 02/09/2014 - 17:41 | Link to Comment Winston Churchill
Winston Churchill's picture

The COMEX and LMBA are already broken in fact ,just  not admitted too as yet.

Between China, and India that is the entire world output.China is the largest sovereign miner

and that gold should not be  counted in world production.

Something is going to break big time in the first half of 2014 IMO.Gold will be revalued

overnight or paper assets devalued.Those are the only choices.

Sun, 02/09/2014 - 17:02 | Link to Comment disabledvet
disabledvet's picture

always good to know times have changed over the years.

http://www.youtube.com/watch?v=7SngTTdzWzU

Sun, 02/09/2014 - 16:47 | Link to Comment debtor of last ...
debtor of last resort's picture

What was the fait of moneychangers in the middle ages? Did they really burn those witches?

Sun, 02/09/2014 - 16:49 | Link to Comment Rukeysers Ghost
Rukeysers Ghost's picture

I should have went heavy into gold in 1235 when I had the chance.

Sun, 02/09/2014 - 16:49 | Link to Comment e2thex
e2thex's picture

 

 

Every night I worry about what has happened to us since the Middle Ages. I lose sleep over this until I realize that we have one hag running Germany, one hag running the Fed, one that will be running for President soon,  and with two more we will have a Royal Flush.

It gives me comfort to know the above.

Sun, 02/09/2014 - 16:57 | Link to Comment Seasmoke
Seasmoke's picture

The Queen is a hag. 

Sun, 02/09/2014 - 16:55 | Link to Comment all-priced-in
all-priced-in's picture

I am no chartist - but since this is a long term chart of the DOW  

Where is long term support?

776.9 on 8/1982?

 

 

 

Sun, 02/09/2014 - 16:57 | Link to Comment TORNasunder
TORNasunder's picture

2 observations; everything is trending up, except Interest rates, what happens when you go zero/negative?

Reserve currencies have been European (I consider the US an extension of Europe) for a long long time now... but the next one might be Asian. That is a huge and disruptive shift.

Sun, 02/09/2014 - 17:02 | Link to Comment Seasmoke
Seasmoke's picture

Time sure flies, while having fun, waiting for Gold to break $50,000 @ ounce.

Sun, 02/09/2014 - 17:06 | Link to Comment Nex
Nex's picture

This is great. Thank you Tyler D.

I look on interest rate milenium chart and there is clear down trend line and that is reason for western world dominations. Is 2012 milenium bottom and economic reverse began to east? I really want to see something like this for  Asia.

Yes, all western story began when Byzantium allow Venice to trade on Adriatic sea and East mediteran, later Black sea, in exchange for help against Arabs, which will be crucial mistake of Byzantium. In that time, 9,10 century that was center of Europe. Then come Crusades, they go to fight with Muslims in Jerusalem, but basicly Crusaders destroy Byzantium and stole many things. In Venice, there is huge amount of stolen things from Constatinoples. And Renaissance and etc. come from Byzantium which was financied from first bankers, like Medici, and deep roots of anti-semitis is related with that time. But Shakespeare that explained in "The Merchant of Venice".

 

Sun, 02/09/2014 - 17:10 | Link to Comment falak pema
falak pema's picture

the charts don't tell the whole story. What they don't tell is why Empires are born and why they fall : German Hohenstaufens 1050-1250, French Capetians 1215-1350, Plantagenets 1350-1450, Valois/Medici/Popes 1450-1525, Habsburgs 1525-1650, Bourbons 1650-1760, Revolutions 1760-1815, Pax Britannica 1815-1915, Revolutions/WW 1915-1945, Pax Americana 1945-2025...?

It is true that imperial wars ALWAYS generate deficits and put financial systems under strain leading to interest rate hikes, money dissemination and bubble formation/collapse.

BUT THE CAUSE IS IMPERIAL PLAYS , ALWAYS.

AND THE CONSEQUENCE FINANCIAL "BUBBLE O NOMICS" SLEIGHT OF HAND BY THOSE WHO CREATE MONEY FOR EMPIRES. The Moneychangers, like the intellectual cum ideological Shamans, always feed the ambitions of Oligarchical hubris. 

When you understand the recurrent mindset of Imperial games the rest is a natural consequence; just like today.

OIL EMPIRE feeds the hegemonical dream since 1945 of the US age.

Its the Jerusalem of this consumer age, and the green back its prophet and WS its church.

The sole commodity in today's world that acts like "God's metaphysics" to galvanize both elite Oligarchs and sheeple consumers.

We are shit scared we are running out of its Olympian corn of Abundance and we can't see the new, more intelligent god of the renewables age; the new Saviour. 

Sun, 02/09/2014 - 17:17 | Link to Comment Nex
Nex's picture

First western empires are not so important. Crucial moment is Venice trade with Byzantium. Venetians took huge amount of trade and in one moment there was huge amount of Venetians traders in Constantinople and East Romans and Greeks, massacred those traders because they accuse them of economic destruction of East Rome(Byzantium). Which will lead to transport of Crusaders with Venice ships to Constantinople and destruction of East Rome. All later of Byzantium was slow death.

 

And i agree, oil is key for US success. But now...

Sun, 02/09/2014 - 17:40 | Link to Comment falak pema
falak pema's picture

You are right the Crusades were about conquest of Silk and Spice Asian routes.

The Aim of Western early empires post Charlemagne, poor but populous tribal rooted kingdoms under christian god, galvanised by "god wills it" ideology, was always to take Constantinople with the help of Venice like they earlier invaded Holy land with the Genoa/Pisa city states to succor those same potentates whose wealth they came to resent during first Crusade. 

Its from that moment onwards that western empires became important as they interfaced with richer Orient, replacing Eastern Rome. 

Western Empires then took on the challenge of Mongol and Ottoman revival. And by 1450 they had REFOUND the flame of knowledge that had escaped them to Orient at Rome's fall and Byzantine's isolation. Its the school of Florence under the Medicis that revived the flame of knowledge and the west became unstoppable whereas the Orient relapsed into obscurantism. 

The time line on those charts begins with Venice whose military arm in Constantinople's capture was the Crusaders. Imperial war par excellence not against the Infidel but the "schismatic Orthodox"; awesome ideological sleight of hand.

God is a lovely alibi, then as today, and the Silk/Spice route of old is now the Ghawar fountain of black gold. 

Sun, 02/09/2014 - 17:10 | Link to Comment Goldilocks
Goldilocks's picture

Shirley Temple - On The Good Ship Lollipop.avi
http://www.youtube.com/watch?v=WLLSqpYyPD8 (3:30)

Sun, 02/09/2014 - 17:31 | Link to Comment css1971
css1971's picture

These charts demonstrate "The System". Whereby wealth is transferred from the many to the few.

One of the questions worth asking is, why after several hundred years haven't the many woken up to "The System"? Surely some have of course, almost everyone here would be aware of what is going on. But why not the masses?

My 2nd point is the lowering interest rates trend indicate the general increase in the availability of credit. The greater the proportion of the population with access to credit, and indeed, in debt, the lower interest rates will tend to be.

Sun, 02/09/2014 - 17:31 | Link to Comment Quinvarius
Quinvarius's picture

I am not going to pretend to understand the methodology behind that gold chart, or what it depicts.  It is like someone is reaching very hard to make gold look expensive when it is actually the cheapest it has ever been in history right now.

Sun, 02/09/2014 - 18:14 | Link to Comment Professorlocknload
Professorlocknload's picture

I look at it, from 1930's to now, as an inverse dollar value chart.

 

Sun, 02/09/2014 - 19:51 | Link to Comment Clowns on Acid
Clowns on Acid's picture

On a long enough timeline..... sorry had to say it....

Sun, 02/09/2014 - 20:28 | Link to Comment deflator
deflator's picture

 The past 150 years of persistent economic growth is an anomoly in contrast to the rest of human civilization.

 The Krugmans of the world would have you believe that the past 150 years of persistent economic growth is entirely attributable to our greater understanding of economics.

 Nobel prize winning economists believe that creating more money(debt) will always produce more things.

 I believe the past 150 years of persistent economic growth is attributable to the excess energy that has been derived from crude oil, coal and natural gas and the technology that has been invented to consume it.

Sun, 02/09/2014 - 22:22 | Link to Comment Jumbotron
Jumbotron's picture

****  DING DING DING ****

WE HAVE A WINNAHHHhhhh !!!!

 

Sun, 02/09/2014 - 22:41 | Link to Comment Radical Marijuana
Radical Marijuana's picture

The longer term interest rate chart in this article expands the same comments that I made about the interest rate chart in the previous article:

http://www.zerohedge.com/news/2014-02-08/long-term-charts-1-american-markets-independence

In the past, the vicissitudes of wars were more directly related to wild swings in interest rates. However, in modern times, the organized crime became more sophisticated, with the Central Banks, the Fraud Kings, effectively privatizing the previous powers of the War Kings. Thus, the wild ways that the history of wars impacted upon interest rates has been replaced by the wild ways that the banksters can manipulate interest rates.

Sun, 02/09/2014 - 23:03 | Link to Comment bugs_
bugs_'s picture

oh...oh!  prechtering or kondratieving makes me almost as hot as deflation talk.

Sun, 02/09/2014 - 23:39 | Link to Comment beentheredonethat
beentheredonethat's picture

if you read the book mass flourishing- the period 1820 to 1970 was the time a vastly rising productivity in america- which cooresponds to the stock market chart

No real productivity gain 1970-1995, slight internet boom 1995-2000, and decline since- all disconnects from the chart.

 

Mon, 02/10/2014 - 06:11 | Link to Comment Graabein
Graabein's picture

I am a gold bug as bad as many here at ZH, but I get a little scared looking at the gold chart. I do realise gold has been managed throughout history and that the dollar completely converted to fiat under Nixon in 1971. I also understand the exponential rise in the amount of printed dollars in recent years. But looking at this and hearing the talk of 50,000 gold price? Help me!

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