Golden Ratio: Using Gold to Price Market Data

VISUAL CAPITALIST THE GOLDEN RATIO GAIN PERSPECTIVE BY USING GOLD TO PRICE MARKET DATA Fast stoenase: n me gold.net PRESENTED BY THE WEB'S MOST POWERFUL FINANCIAL SITE Measuring market data using fiat currencies can be misleading. Even though an asset may rise in dollars, it may be because of declining currency value rather than true economic progress. Gold's steady purchasing power makes it an ideal alternative pricing mechanism. CLICK HERE TO CONTINUE READING. DHRREL ARE FOR EXAMPLE OF OIL ÚSD RATIOS All prices are really rates of exchange. Changes to both sides of the equation have an impact. If the value of oil increases OR the value of USD decreases You still pay more at the pump. DO NOT IGNORE THE DENOMINATOR What if the currency itself is losing purchasing power? 400 The US Dollar has lost 97% of its initial value since 1913. 1967 EQUALS 100 300 200 100 US DOLLAR PURCHASING POWER 1913-2013 In many cases, an asset's value is not increasing - it is just that dollars are worth less and it costs more to purchase it! 4 REASONS TO PRICE IN GOLD By using gold as a barometer, investors get new insight on markets and currencies. A RICH HISTORY Gold has been prized by human civilizations for thousands of years. STABLE SUPPLY Gold supply rose about 1.5% average annually over the last five years. 1.42% 2008 1.52% 2009 1.56% 2010 1.60% 2011 1.60% 2012 FACT THE UNSTABLE DOLLAR SUPPLY Comparatively, the Fed's balance sheet grew 27% per year in the last five years. For the week ending Feb 15th, 2013, the Fed printed $60 billion in new currency alone 260% 2009 This is a 136% the market cap of Costco on the same day. 1800% more than the gold supply per year. 12096 2009 2010 2011 2012 2013 COSTCO 3 UNIVERSAL APPEAL Demand for gold is inelastic and widely dispersed. Gold is increasingly favoured by buy and hold governments including powerhouse countries such as China and Russia GOLD 999.9 THE GOLD MARKET IS GLOBAL. TRADING VOLUME BILLIONS / DAY (USD) 2010 TRADING VOLUME MILLIONS / DAY (OZ) 120 55.1 Gold OTC 100 80 60 40 20 16.9 COMEX (USA) 1996 1998 2000 2002 2004 2006 2008 2010 1.5 TOCOM (Japan) 1.4 MCX (India) 4 HIGH LIQUIDITY Average Daily Turnover (as a % of total outstanding) 796 696 596 Gold has more turnover than many sovereign bonds. 196 UK Gilts German Bonds Japanese Gov't Bonds US Agencies Gold US Treasuries FED'S BALANCE SHEET O GOLD PRICE The Fed's policies are the main drivers causing the dollar to fall, which is reflected in a higher gold price GOLD PRICE 2800 2400 $1600 FED'S BALANCE SHEET 2000 $1200 1600 120 S800 B00 $400 *00 Sbilons 200 of USD $200 2003 2013 75% of Fed meetings result in positive stock market gains. SGP 500 1500 2013 1250 1000 In fact, a third of stock market gains 2009 750 OCcurred on Fed announcement days. (Since December 2008) 1 Average: +0.74% Wait. IF THE MARKETS GO UP, WHAT'S THE PROBLEM? LET'S LOOK BELOW THE SURFACE REAL MEASUREMENT OF EQUITY RETURNS FISU FLEX GENZ 46.09 11.30 Pricing the major equity markets in terms of gold reveals the real return on investor performance. SPX DJIA 40% -64% 2013 Pricing the US economy in dollars shows a steady incline, yet the sentiment among most Americans is more negative. In US Dollars, the economy shows a steady rise in GDP. Priced in USD 0% However, when priced in gold, US aggregate income purchases less than 10 years ago. Priced in Gold 73% 2013 All major countries have positive inflation rates but even these official measures fail to capture the real loss in purchasing power. WEALTH IN RÉAL TERMS The Consumer Price Index (CPI) shows the cost of living has risen less than 2.5% per year over the last 10 years. 2003 - 2013 +129% Gas Price +183% WTI Crude Oil Price +25.6% CPI(ConsumrPica lde) (all grades and formulations) 280%6 240% 200% N 160% 120% 80% 40% 096 2003 2013 2003 $2.71 Even BIG MAC prices have risen more than 5% per year over the last 10 vears. This is over 1009% more per year compounded than the official CPI rate. $4.38 ARE THINGS REALLY LOOKING UP? me high. 2013 In USD terms, wages are at an S6b S4b $26 1972 + 2012 However, when wage dispersments are measured in gold ounces, a different story emerges. 16oz Wages in the US have been declining since(2001) 120z 8oz THE HARD REALITY Real wages are back down to their 1980 low when America was entering a deep recession from 81-82. EQUITY MARKETS AND WAGES ARE AT AN ALL-TIME "HIGH" IN USD TERMS, BUT GOLD CAN HELP INVESTORS SEE THE REAL STORY. IN PART II We show how using gold as perspective can influence specific investing decisions. gold.net the only financial site on the web providing real time access to stocks, financials, commodities, forex, bitcoin, and economic data all in one system. USE GOLD.NET TO REPRICE THE MARKETS IN GOLD OR OTHER CURRENCIES TODAY. VISUAL CAPITALIST Educating a new generation of investors on resource investing and management VISUAL CAPITALIST www.visualcapitalist.com Top 5 Sources: www.gold.net for repricing financial and economic series in gold www.bespokeinvest.comithinkbig/2013/1/29/wil-led-day-gains-continue.html www.seekingalpha.com/article/1187041-the-fed-prints-60-bilion-in-7-days-gold-wil-tolow http://research.stlouisted.org/fred2/series/CUURO000SAOR http://minerals.usgs.gowiminerals/pubs/commodity/gold/ For a complete list of sources, please visit: visualcaptalst.com/sources