There's a column in today's (rag sheet) NY Post written a Seth Lipsky who attempts to distort the truth about the stock market's performance since 1971. That's when Nixon closed the gold window and the dollar lost all convertibility to gold. Actually, FDR took us off the gold standard domestically in 1933, making it illegal for Americans to own gold, while fixing the price of the metal at $35 per ounce, which is where it stayed for the next 38 years. Nixon's move merely removed the ability of foreigners to convert dollars to gold.
Anyway, this article uses all the usual, uniformed, gold bug trickery and distortion even as the author implores us that's it's not at all a trick.
He starts off by saying that if you divided the Dow by the price of gold (typical, stupid, unsophisticated gold-bug attempt at analysis), it is actually down when looking over the past four years. (Notice the small time sample.) Who cares if the nomimal "price" of the Dow more than doubled in that time? This guy says it's all a mirage and gold is making that clear.
While it's true that the Dow/gold ratio went from 9.3 in January 2009 to 8.47 now, if you start the comparison just ONE MONTH LATER, i.e. at the time of the fiscal stimulus, then the ratio went from 7 to 8.47. Clearly, a much different result. This is one of the problems with trying to argue with a very narrow and highly selective set of statistics.
Expanding the analysis, if you go back to 1971, when Nixon ended gold convertibility, the Dow/gold ratio did fall sharply for several years, until 1974. What was that about? It was about gold coming out of a situation where it had been fixed in price for 38 years. Naturally it shot up. In addition, nobody really owned any gold, so there was no one selling to mitigate the rise. However, by the time folks started buying gold around 1974 (still in relatively small quantities), the Dow/gold ratio was moving higher and the Dow's been in a bull market against gold ever since.
The other thing not mentioned in the Post article is that the Dow's nominal price level does not reflect its total return, which means taking into account the reinvestment of dividends. This is huge. Once you factor in reinvested dividends the stock market trounces gold. It's just another fact conveniently omitted by the gold bugs.
Lipsky continues by moving to gas prices, which he says went up not because of speculation or tight supply, but because the dollar was losing value. And here he tries to plainly pin this on Obama, even though he uses a quote from a speech Obama made back in 2008, before he was president. The dollar may have been losing value against gold at the time, but it was holding its own against a broad basket of currencies. The dollar Index, the very index that is so widely followed and cited by the gold bugs, has gone from 71 to 80 in the period from 2008 to today. The dollar has gone up, not down. They just say it's gone down and expect you to take them at their word.
That's the gist of it. Another misleading piece of crap commentary by an ideological goofball who makes his case easy enough for a second grader to debunk. It's laughable. This is not informed analysis, it's cheap dogma.
