Gold Works Whilst Stagflation Lurks

 

Welcome to our 600th consecutive Saturday Edition of The Gold Update. "Ain't missed a one, hon!" And to all of our valued readers, linkers, publishers and broadcasters across the past decade and 'round the world, our humble and heartfelt thanks. You are why we've made it this far.

Back on 21 November 2009, (with Edition No. 1 which was at the sole request of our great mate JGS), the price of Gold was 1151. Now 11+ years later, price settled yesterday (Friday) at 1844, an increase from then of 60% (and one by as much as 81% upon Gold reaching 2089 on 07 August of last year). Across that time span, the U.S. money supply (as measured by "M2") has increased 145%. Thus in that vacuum alone, Gold today "ought be" 2820 ... and of course when honestly accounting across the past four decades, rightly incorporating therein the increase in the supply of Gold, we've more meaningfully the above Gold Scoreboard valuation right now as 3906 (GLD).

In turn, that means Gold by such trending construct likely gives us a "valuation" by year-end of 4000.

For hardly is the Fed gonna play dead -- did you see the "Biden Economic Boom" Retail Sales growth for April -- oh wait, there wasn't any...and upon Gold eventually catching up to "valuation" as is its historical wont, add in the overshoot and we'll one day see Gold 5000 for real

One wonders as well when we'll one day see S&P 2000 for real. For those of you with children who are still taught arithmetic in school, they clearly can divide the S&P 500 (4174) by two, thus calculating it to be line with the today's actual level of earnings (or lack thereof).

"Or earnings could instead double, mmb... and congrats on our 600th, man..."

And a thousand thanks to you, Sir Squire. Couldn't have made it this far without you. As to the notion of earnings doubling, those for Q1 of this year are pretty much in place: 433 constituents of the S&P 500 have reported, of which 395 had income (not losses) in both this Q1 and in Q1 of a year ago. And their median earnings increase? ...(wait for it)... 21.8%, even with climbing somewhat out of COVID. That ain't gonna do it. We thus remain on vigilant watch for the "Look Ma! No Earnings!" crash. Coming soon to a portfolio near you. In fact, let's reprise one of our favourite graphics, (the present "live" S&P price/earnings ratio therein boxed at 54.1x):

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Disclaimer: If ever a contributor needed a disclaimer, it's me. Indeed, your very presence here has already bound you in the Past, Present and Future to this disclaimer and to your acknowledging ...

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