The Dow Jones finally got to the 10,000 points, and we already star hearing numerous finance experts and politicians saying that we are in the beginning of a economic recovery. We also heard in a call with analysts, Google CEO Eric Schmidt said that the worst of the recession is behind us and that the company feels “confident about investing heavily in our future.”
This latest news has been enough for numerous citizens to star jumping as cheerleaders celebrating a recovery kind of a little early. Why I say this? Simple let’s just crush the numbers:
- Yes we are coming back to the 10,000, but what some people haven’t realized. A good way to look at it is, before the finance crisis the Dow was in this level in 1999, to put it in perspective we have lost a whole decade. Just like Japan did in the 90’s.
- The worst part is what CNN, Fox News, and CNBC hasn’t told you. Gold is a precious metal use as protection in times of politically and economic uncertainty, but most of all is use as inflationary hedge. Well unfortunately Gold was in 1999 300 per oz. when the Dow hit 100000. today the Gold is above 1000 per oz. So, since March of 1999, the Dow has provided a return of zero minus more than ten years of inflation support by a very weak dollar thanks to this current and past administration and the Federal reserve.
In this image below shows how much power it takes to buy the Dow with Gold, through years it takes less gold to buy the Dow. In 1999 you needed 45oz of gold, now you just need 7.58 oz.
In other words we are not making wealth, we are losing wealth. In conclusion recession is far from over when houses prices still haven’t stabilized and we still talking about 10% unemployment rate.