My Favorite S&P 500 Chart

Jesse charts one of my favorite charts, and one that I like to show people who see risk in gold and precious metals. I have been watching this chart since 2005 and wonder how people can blindly feed their dollars into such a machine as the S&P 500? When you compare the S&P to gold you are comparing performance. How can you say the risk is in the denominator of this ratio? The denominator is growing faster than the numerator, driving the ratio lower. Gold is the denominator.

12 June 2011

SP 500 Deflated By Gold

The stock market rally has been due to the Fed’s monetization and the subsequent flow of liquidity into financial assets.

There is no recovery in the real economy, because there has been no genuine reform of the financial system or rebalancing of the distorted US economy.

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