Wednesday, September 24, 2008

Do I owe Ron Paul money?
Chapter 1: The Gathering Storm

So, this summer, I had a guy subletting in my apartment who is a Ron Paul fan. He spent a lot of time trying to proselytize me, in the fashion of Ron Paul fans everywhere.

This effort was somewhat handicapped because he also believes that the Federal Reserve is a satanic conspiracy engineered by a mysterious group of international financiers, and that the US government was behind the September 11th attacks. This lowered his credibility somewhat.

I should have simply avoided conversation with him. He wouldn't stop preaching, and I couldn't keep myself from arguing with him. But no matter how often (or how strongly) I disagreed with hi, he never got upset or angry. And whenever I thought I had him cornered, he cheerfully switched topics and began anew his attempts to persuade me.

After weeks of attempting to nail him down, I finally got a specific prediction out of him. He believed that the world was on the brink of another great depression, and that we would see this in two ways. First, stock prices would fall. Second, the price of gold would rise. In a year or two, he expected that the price of gold in dollars would converge with the Dow Jones Industrial Average and meet somewhere around three or four thousand.

So, we made a wager. The Dow was then at about 11,000 and the price of gold was almost $1000 per ounce. This left a gap of about 10,000. I said that if this gap closed to 5,000 or less before September 1, 2009, that I would make a sizable contribution to Ron Paul's congressional reelection campaign. (For his part, Bob pledged that if he lost the bet he would refrain from contributing to Ron Paul.)

For the last two months, I have been watching both the price of gold and the Dow Jones. Here are the results so far.

July 21, 2008 - initial measurements
* Dow Jones = 11,467.34 points
* Price of Gold = $960.50
* Difference = 10,506.84

August 21, 2008
* Dow Jones = 11,430.21 points
* Price of Gold = $833.50
* Difference = 10,596.71

September 22, 2008 (no data for 9/21)
* Dow Jones = 11,015.69 points
* Price of Gold = $889.00
* Difference = 10,126.69

So far, it looks like there is no appreciable convergence in these two numbers. The distance between them is about what it was on the day we made the wager.

Of course, the gap could close suddenly. Lots of morons on TV with great hair and undergraduate degrees in communications are talking in grave tones about a terrible lurking danger that will shortly ruin the US economy. But these people have also told me to watch out for Monkey Pox and shark attacks. So I'm watching and waiting, but I'm not buying guns and hoarding gold yet.

Sorry, Bob.



SayitwithanH said...

I fear you may soon have to make a donation. DOH!

I'll be staying away from the beach for a while. ;)

the House of Payne said...

Could be. But I have 11 months before the wager is over, and the stock market would have to fall another four or five thousand points. If it does, I won't be the only one who is sad and sorry.

Moishe Mormonides said...

Looks like the market has today recovered about 500 of the 700 points that were lost yesterday. Is the apocalypse not coming?

Zol zein!