This from Reuters…a few moments ago
NEW YORK (Reuters) – Wall Street opened slightly higher on Thursday as aggressive action by the Bank of Japan and supportive comments by U.S. officials indicated continued support for the market.
Have you noticed how paranoid the central bankers of the developed world have become lately. At the slightest hint of a market downdraft, they are on the keyboard and at the microphone…printing and talking the market back from the brink.
This is micro managed capitalism and ultimately it does NOT work. Capitalism works on the free and unfettered flow of funds and ideas. It is organic. By its very nature, it is chaotic and responsive to the changing needs and wants of the main street marketplace.
The current arrangement is perverse and hugely ironic in the sense that the more the bankocrats try to control the world, the more chaos they create.
Take a look at the graph below which tracks the Dow vs. Gold ratio…which, simply explained…is how many ounces of gold do you need to buy a share of every stock on the Dow. This graphs comes courtesy of the smart folks at Cambridge House via that other smart Singaporean based Englishman, Grant Williams.
- Well…so much for stability!
As you can see…since the Fed started their little game of print the dollar back in 1913, we have seen massive spikes, both in relative and absolute terms. It was bad enough while there was still some modicum of respect for a gold based currency, but once Tricky Dick Nixon took the US off the gold standard in August 1971 (14th to be exact), the smarties could really get down to some serious fractional reserve banking and it was off to the races.
And things have been just peachy since then, haven’t they?
The good news is that it makes it easy to know when to sell your gold. When that one ounce buys the Dow, you’re there.
Forewarned is forearmed!
