Our 500th Gold Update: Extremes Are The Norm

Not to dwell upon today marking our 500th consecutive Saturday penning of this missive: such a milestone is merely a function of the world's accepted mathematical practice of functioning in "base 10". (Were we instead oriented to the octal system of "base-8", this would already be the 764th edition, or via the duodecimal dynamic of "base-12", just the 358th edition).

Still, with dedicated consistency in having missed nary a Saturday, we are now fortunate to write Number 500 for our dedicated readers to whom we are eternally thankful, a blessing as we put "pen to paper" this morning from the wee Mediterranean fishing village of Monaco.

Gold's consistency, however, when it comes to price throughout our missives has been hardly that. 499 Saturdays ago in writing from San Francisco on 14 November 2009, the price of Gold was 1119. Its extremes since then have been 72% higher at 1923 as well as 7% lower at 1045. With Gold having settled out this past week yesterday (Friday) at 1345, price "net net" is up but a mere 20% across that nearly ten-year spectrum.

By comparison, the US money supply as measured by M2 is +73% and the National Debt is on pace to have doubled by next year from $12 trillion in 2009 to $24 trillion. The S&P 500 across the same span is +164%, its sputtering earnings performance throughout having seen our "live" price/earnings ratio expand from then 20x to now 31x. (And to return to the business school "normalcy" wherein even 20x might be considered "extreme" would mean a 1000-point haircut -- some 32% -- for the S&P).

Fairly scary stuff that, were to folks to actually to take notice of such present extremes. A charter reader of The Gold Update wrote to us this past week: "It is truly amazing that the investing individual/institutions ignore all the warning signs from the 2000 tech crash, 2008 mortgage/loan scandals and the current debt-to-infinity debacle", and included a quote attributable to Einstein: "Two things are infinite: the universe and human stupidity."

Were wild-haired Einstein around today, he might add a third thing: market extremes, or so it seems. As above noted, there's been the endless levitation of stock prices whilst earnings lack supportive growth. There's the stagnant price of Gold despite the forever growing 3Ds of dollar Debasement, Debt and Derivatives. There's the money known as Silver that has fallen from the rails in maintaining upside stride with Gold's meager rallies, the Gold/Silver ratio today at a "you gotta be kidding me" exospheric 90.6x. Extremes are the norm, which Funk & Wagnalls might consider as a descriptor for "perpetual understatement."

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