Nikkei 225 versus Gold Comparison: Gold Up 300% in 12 Years

In reference to my recent blog post: He Who Laughs Last, Laughs Best! Dow at 14,000 and People Laugh About the Gold Price? Where it was pointed out that, compared to gold (and silver) prices, the Dow at 14,000 in 2013 is actually down OVER 57% compared to the Dow at 14,000 in 2007:

"...what does Gold tell us about the recovery of the top in the DOW? 

In 2007 it took 20 ounces of Gold to buy 1 stock in the Dow index. 

In 2013 it only takes 8.3 ounces of Gold to by 1 stock in the Dow index. 

The Dow is off 58% from its 2007 high in terms of Gold. 

What does Silver tell us? 

In 2007 it took 1056 ounces of Silver to buy 1 stock in the Dow index. 

In 2013 it only takes 439 ounces of Silver to by 1 stock in the Dow index. 

The Dow is off 58% from its 2007 high in terms of Silver."  

... I was getting read to write the same post, excepting this time I was going to compare Japan's Nikkei stock index with the gold prices. Thankfully for my poor math skills, Mr. Nobody has come to the rescue and sent along this article that does my work for me.

Mr. Nobody (thanks!) wrote:

Hello Mike,  I found an article that I hope that might be of some interested to you. 

When priced in gold, it talks about how both the Nikkei and DJIA are in long term bear markets.  It's amazing, when looking at the Nikkei in gold, it has done nothing in 30+ years! The DJIA is following the same trend, just lagging by a decade or so!  

http://static.safehaven.com/authors/brochert/20734.png  (Nikkei in red/black)  

http://pricedingold.com/charts/DJIA-1985.png  (DJIA in blue)  

I will ask the obvious. If the Nikkei has done essentially nothing for 30+ years, with the DJIA has done nothing for 20+ years, what do you think the DJIA will do in the next decade?   

Where do we go from here? 

Well, I know where I go! I go to the link he so graciously sent.

Japan versus USA: Same Depression With a Lag 

Speaking of Japan, do you realize that we are on a similar course when stock markets are priced in Gold? I am not saying deflation of inflation, I am saying "priced in Gold." Only Gold bulls are used to such pricing strategies, but it is time for reality to intrude on the paperbug world.

Whatever monetary chaos we are in store for, Gold will outperform stocks over the next several years. This is open for debate in my mind as much as the question of whether fiat money will retain its value over the next decade is open for debate. Believe what you will.

But notice the "phase shift" chart message between Japan and the USA shown below. The chart is a monthly log scale chart of the Nikkei stock index ($NIKK, the main Japanese stock index) divided by the price of Gold ($NIKK:$GOLD), shown in a black and red candlestick format, versus the Dow to Gold ratio ($INDU:$GOLD), shown in a black line format:

Thanks to Mr. Nobody for the hot tip!

Stocks Will Go Higher if We Keep Printing Money

Today the Dow surpassed $14,000. The crowd cheers. The Fed is buying $85 billion a month, about what the US fiscal deficit is, so then stock prices do and will continue to go up. 

Everyone cheers...

But, the cheering actually means nothing.... As Kyle Bass says, "Zimbabwe's stock market was the best performer this decade - but your entire portfolio now buys you 3 eggs." 

Is there any wonder as to what is going to happen in the USA?

Please refer to Zerohedge and Kyle Bass Tells 'Nominal' Stock Market Cheerleaders: Remember Zimbabwe  

Amid the euphoria of today's crossing of the Dow's Maginot Line at 14,000, Kyle Bass provided a few minutes of sanity this morning in an interview with CNBC's Gary Kaminsky. Bass starts by reflecting on the ongoing (and escalating) money-printing (or balance sheet expansion as we noted here) as the driver of stock movements currently and would not be surprised to see them move higher still (given the ongoing printing expected). However, he caveats that nominally bullish statement with a critical point, "Zimbabwe's stock market was the best performer this decade - but your entire portfolio now buys you 3 eggs" as purchasing power is crushed.

Now Japan's stock market has been climbing higher and higher in the last two months also. The Japanese government has been printing and printing.The currency war has begun and we (the people) will be the losers.

Is there any wonder as to what is going to happen in Japan?

For the Keynesians out there who think this is good fiscal policy, then let me ask the tried and true question, "If government's can create wealth just by printing money, then why are there still poor and starving people in the world?"

The answer is obvious; you cannot fix a debt problem by creation of more debt.

PS: The Japanese stock market has gone way up in January 2013, right? WRONG! It has flatlined against the US dollar:

How Much Has the Japanese Stock Market Risen in January 2013?

There is a rising roar of bulls stampeding to the Japanese stock market. Whether due to Abe's apparent "this time it's different" cratering of the JPY to aid exports (and avoid deflation) or just plain old momentum (as the Nikkei 225 is nominally up almost 8% in January). However, just a little reminder that this return is priced in those increasing worth-less JPY. For all those exuberant overseas investors eying the gains, the reality is that, in USD, Japan's stock market is almost perfectly unchanged since 12/28

Great work, Abe... Deeper in debt and nothing to show for it except the destruction of the purchasing power of the yen.

Groupon Stock Holders! Head For the Exits!

In what, I'm sure will be the second to last post I ever make about Groupon, and how much of a dog company I think it is (the last post will be a "I told you so" when Groupon becomes a penny stock), I'd like to show you Groupon stock performance over the past two days.


Pretty shocking stuff. Especially if you own shares in this company!


On Monday, Nov. 21, 2011. The Dow Jones Industrials (DJI) had a bad day dropping 249 points or -2.1% to finish at 11,454. The NASDAQ Composite Index (IXIC) closed 1.92% lower at 2,529.14. On the other hand, Groupon (GRPN) had an even worse day by dropping almost 10% and another nearly 1% after-hours! See chart:

Today, Tuesday Nov. 22, 2011 (USA time) it wasn't as bad as yesterday's market saw the DJI down 53.59 or -0.49% to finish at 11,493.72. The NASDAQ closed 1.86% lower at 2,521. But! Groupon was one of the top three losers for the day dropping a whopping 3.51 or -14.89% to close at nearly their IPO price. The final closing was 20.07.

Head for the life rafts! If anyone knows where or how they can short GRPN shares, please comment and let us all know. Opportunities of a lifetime, like this one, don't come very often.

As I have written over and over before, a business model built on SPAM mail isn't a good business model at all. They should have built a portal. They should have taken Google's $6 billion dollar offer.

I'll make a prediction here: GRPN stock price will be under $5.00 by December 15, 2012 (maybe $1.00?) So if you want to be stupid and "BUY" then wait for their 60% off Groupon share price coupons! (Or, as Karl Denninger says, "There's crazy and then there's really crazy!") 

UPDATE: Zerohedge writes, "Groupoff - Groupon back to IPO price":

As of this moment, everyone who has bought and held GRPN stock since the IPO price is at best flat, and almost certainly at a massive loss, as only a few banks were allotted shares at the $20.00 offering price, which were quickly flipped to subsequent greater fools. As of this moment, GRPN is back to the IPO price or precisely $20.00. We expect once this is taken out for the one way Grouponzi Red Light Special to fair value, somewhere around $0.00, to take a few months at most.

PS: I have made some really good bucks buying and selling stocks over these 35 years... Actually, only three. I've only ever bought three times. I won big three times. Great opportunities only come once every ten years or so (unless you have insider information) one day soon I will write about these exploits. I found these chances of a lifetime just simply from reading the news. You can too. Sometimes things are just painfully obvious. As a loser, Groupon was one of them.

Had I been able to invest huge money instead of my piddling amounts, on the good ones....I might have been rich!

Or as my wife says:

UPDATE 2: Groupon was the #2 biggest drop on the entire NASDAQ today according to Yahoo Finance:

NEW YORK (AP) -- A look at the 10 biggest percentage decliners on Nasdaq at the close of trading:

School Specialty Inc. fell 26.4 percent to $5.17.

Groupon Inc. fell 14.9 percent to $20.07.

First Clover Leaf Financial Corp. fell 11.6 percent to $5.74.

Viasystems Group fell 10.9 percent to $15.77.

ID Systems Inc. fell 9.7 percent to $5.14.

Mackinac Financial Corp. fell 9.6 percent to $5.00.

Technical Communications Corp. fell 9.6 percent to $7.17.

Forbes Energy Services Ltd. fell 9.2 percent to $5.35.

KIT Digital Inc. fell 9.2 percent to $9.52.

Lihua Intl fell 8.8 percent to $5.36.

UPDATE 3: Another from Zerohedge:

Yet another fatal flaw in GRPN's business model is revealed to the sheeple IPO buyers.

Bakery Burned in Groupon Deal for 102000 Cupcakes

‎ - International Business Times