Saturday, December 27, 2008

Do I owe Ron Paul money?
Chapter 2: Their Finest Hour

So, as I have mentioned before, this summer I sublet to a Ron Paul nut. He said that the stock market is going to crash and everyone is going to buy gold to use when the economy collapses and we abandon paper money. That sounded nuts to me.

So we made a bet on whether or not the price of gold and the Dow Jones Industrial Average would converge. The gap in July was about 10,000, and I said if that closed to less than 5,000 in the next year or so then I would make a substantial to Ron Paul's congressional campaign. Or whatever.

So for the last five months, I have been watching both the price of gold and the Dow Jones. August and September were very good months for me. The gap remained at about 10,000 almost the whole time; there were only three days when Bob's predictions were ahead of the curve.

But it's been pretty ugly since then. Here are the numbers:

October 21, 2008
* Dow Jones = 9,265.43 points
* Price of Gold = $795.00
* Difference = 8,470.43

November 21, 2008
* Dow Jones = 7,552.29 points
* Price of Gold = $738.00
* Difference = 6,814.29

December 22, 2008 (no data for 12/21)
* Dow Jones = 8,579.11 points
* Price of Gold = $835.75
* Difference = 7,743.36

It's not been pretty. Bob's predictions were ahead of the curve for 33 of the 63 business days in these three months. But there are two bright spots. First, the price of gold has not risen at all. In fact, it's fallen about a hundred dollars an ounce since this summer. That's good. It means not everyone is a panicky nutjob with an irrational fear of paper money and equally irrational faith in the magical powers of gold.

Second, like the rescue of defeated Allied forces from total annihilation at Dunkirk, bailouts from the Fed have prevented a complete economic collapse and Wall Street has bravely rallied in December to save me from losing the bet and having to donate to Ron Paul.

As my good friend Winston once said:

Let us therefore brace ourselves to our duties, and so bear ourselves, that if the American economy and its stock markets last for a thousand years, men will still say, "This was their finest hour."

So, chin up, lads. And until next time, cheerio!



David said...

But, John, if you don't donate to Dr. Ron Paul, Savior of Mankind, who will save us from the space werewolves? And the lizard people who use paper money as an aphrodisiac? Who, John?

the House of Payne said...

Good question. My answer: Tom Cruise.