Wednesday, October 10, 2012

Gold vs. Hourly Earnings

Click to enlarge.

On the one hand, the most recent data point is firmly on the "sure thing" (R-squared = 0.977) exponential trend line. Since April of 2001 it has been an awesome display of consistency. To the faithful gold bugs, I say well done.

On the other hand, no exponential trend lasts forever. If history is a guide, then the surer the exponential trend, the more cataclysmic its eventual failure will probably be (whenever that is). Why? When it comes to investments, it is human nature.

May 19, 2012
The Epic Momentum Bubble v.3

If you have a "sure thing" winning strategy, then why not always bet twice as much as you have? Genius!

Disclosure: I owned a great deal of gold (and silver) from 2004 to 2006. I certainly can't complain about the results. However, a whopping 87+ hours of work to buy one ounce of metal that I can neither eat nor personally use on the hopes that someone else will want to buy it from me at an even higher price in the future? I just can't see myself do that. I will be the first to admit that I value my free time *and* can be fairly lazy though. This is not investment advice.

See Also:
The "Sure" Thing

Source Data:
St. Louis Fed: Custom Chart


TJandTheBear said...

Approximity Model

TJandTheBear said...

Earnings / Energy

Stagflationary Mark said...


As you can probably guess, I'm not much of a believer in the Approximity Model.

Gold / Median New House Price

As for energy, I'm also not a believer in gold price to oil price ratios over the long term. We burn oil. In theory, we can run out. We do not burn gold.

Just opinions of course.

dearieme said...

I've just sold about half of my silver ETFs. The price had almost doubled while I held them, so the remainder "come free".

Isn't it amusing how we use bogus rationalisations to persuade ourselves of the wisdom of doing something we just want to do?

Stagflationary Mark said...


Isn't it amusing how we use bogus rationalisations to persuade ourselves of the wisdom of doing something we just want to do?

I think my best personal example would be that the more I play Borderlands 2, the cheaper it gets per hour. Therefore, I must play it a lot! Hahaha! ;)

EconomicDisconnect said...

I think you have failed in this trendline to account for all the hours now worked by......Robots! Adjusted for real hours worked by real people, gold is a total steal at this cheap price :)

Stagflationary Mark said...


Funny you should bring this up. My latest post shows why I'm counting on the robots to keep the treasury yields down! No joke.

Manufacturing Employees vs. Treasury Bills

May you live in robotic times.

It's a Chinese curse.