Comparing the markets 9/11/01 vs. 9/11/09

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Precious Metals Blog

Monday, September 14, 2009

Comparing the markets 9/11/01 vs. 9/11/09

9/11/01 - Dow 9605
9/11/09 - Dow 9605
Net Change - ZERO

9/11/01 - U.S. Dollar $1.15
9/11/09 - U.S. Dollar .76
Net Change -35%

If you have had your money in the Dow Jones 30 stocks over the past 8 years it appears you are dead even, however you actually have lost 35% in buying power.

9/11/01 - Crude Oil $29.00
9/11/09 - Crude Oil $70.00
Net Change +141%

Even though the dollar lost 35% of its buying power the price of Oil has gained 106% or 13.25% per year.

9/11/09 - Gold $290.00
9/11/09 - Gold $1,003.00
Net Change + 248%

Calculating in the -35% decline in the value of the dollar gold has gained 213% in buying power or 26.6% per year.

We actually expect this to accelerate over the next few years because of the Fed's monetary policies. The fact remains that we are bankrupt and in dire need of more capital, we are trying to print our way out of the financial mess we are in and the other shoe is about to drop. Commercial Backed Mortgage Securities are the next sub-prime disaster, in fact its far worse than the sub-prime mess.

The U.S. is also monetizing the debt by buying our own debt at the treasury auctions, kind of like using the Mastercard to pay the Visa bill. I see Treasuries as the next big bubble.

No matter how you crunch the numbers gold appears to be the only answer.

Newly created capital will further devalue our Dollar, a new financial crisis in the Commercial Real Estate market will eclipse the Subprime disaster and send banks spiraling down and the monetization of our Treasury debt will cause instability and doubt causing a meltdown of the Treasury bubble.

JMC

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