Archive for April 2010

What are the odds?

April 24, 2010

I have got a very interesting chart from Daniel Frisberg forwarded to me that I now want to share with you. It shows how Dow Jones Index has done in relation to the Price of  Gold. It looks terrible bad! Investors who put their value, hopes and money to gold have done multi-fold better than the others who invested into the stock market. Look at the graph and wonder.

So what now? There are more questions than answers for sure. China is the largest investor in US bonds and securities before Japan and other countries. China puts its surpluses also into raw-materials, land, and technology. China is also printing more Yuans (RMB) in order to avoid revaluating its currency. What has this to do with Dow and Gold? It has a quite a bit, then when the external value of US Dollar goes down, the value for Gold measured in USD goes up. It is not so much surpricing to see Dow to drop when compared with the price of gold. The external value of USD has dropped against Euro more or less 50% from the launch of Euro; the value of gold has risen sharply, and the stock market plummeted as we know. There we have the mess.

I come back to the original message I have been telling for a couple of years already: the USD must get cheaper (loose its external value also against Chinese Yuan), US exports must get curbed, and the manufacturing must return back to the USA and the value must get put into high quality, fast delivery, and local customer service.