I've been informally keeping track of some stats to help make the BOE analysis. I've decided to share some of them with you. As all Back of the Envelope Analysis, this is just a rough estimation of what is going on.
January 12, 2008
BOE PI - 14.629
Euro-SI - 8578.64
Gold-SI - 14.04
The Back of the Envelope Price Index (BOE PI) is a measure of the rate of consumer inflation without the month to three month lag of official statistics. I collect these directly from the supermarket or online if I'm not in town.
Pound of Ground Beef - $3.99
Pound of Spaghetti - $0.8
Head of Lettuce - $1.99
Gallon of Milk - $4.59
Gallon of Unleaded Gasoline - $3.259
Index Value - $14.629
Collected from http://www.safeway.com and http://losangelesgasprices.com
The two Back of the Envelope Stock Indexes are based on two competing stores of value. Gold is a physical store of wealth and the Euro is the biggest challenger to the US dollar. Determine the rate of currency change by valuing the Dow Jones index value in Euro and also in Gold. The index will demonstrate relative purchasing power of dollar in competition with other measures of value.
Euro-SI
Euro-SI = Dow Jones Industrial Average/ Current Exchange Rate (Euro to Dollar)
Euro Value @ 1.46950
Market Closed @ 12,606.30
8578.64 = 12,606.30/1.46950
Gold-SI
Gold-SI = Dow Jones Industrial Average/ Price of Gold
Gold Value @ 897.70
Market Closed @ 12,606.30
14.04 = 12,606.30/897.70
I know these are particularly simple, but they help me understand what is going on. I look forward to your feedback.
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1 comments:
Yes, I regret to acknowledge that the trend suggested by Peter Schiff is going to be quite accurate... 1 ounce of gold could buy the stock market. JAJAJA, well hope not, but that would imply at this moment that the ounce of gold would cost 12600 USD, or that the stock market would drop to around 1000 points... What´s your position regarding that assumption?
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