Deflating the S&P 500 Reveals the Full Extent of the Recent Market Crash

The full magnitude of the Market's decline in the past 20 months has been significantly hidden by the effects of inflation.  When the S&P 500 is corrected for the effects of inflation, the true extent of the drop can be seen clearly.  With the effects of inflation removed from the Index, it becomes evident that the Market, at the bottom of the recent drop, fell to just 39.4% of the value at its peak - which, by the way, occurred in February 2000, not in October 2007.

Further, the level at the end of June, when corrected in a similar way, turns out to be a decline of more than 53% from its highest level, leaving the Index at less than 47 % of its peak.  Please follow the links to see the full article.

An Interesting Vehicle for Speculating on Metals

06/23/09  International Royalties (ROY) is a company with very diverse holdings in mining ventures spread over the globe. The Company holds royalty interests in mines producing, or planning to produce, gold, nickel, uranium, diamonds, as well as the "Platinum Group" metals (platinum, palladium, rhodium, ruthenium, osmium, and iridium).

The companies shares represent an inexpensive way to take a position on a future rise in both precious metal prices, and production levels, as many of the companies interests are in mining ventures that are in the very early stages of development.  If, as some suspect, the price of gold and other precious metals rises sharply in the future, this company could see some significant increases in it's share value.

Disclosure: Staff members hold a small position in this company's stock.

Treasury Bonds Rise at Latest Auction

The latest auction of US Treasury Notes showed renewed strength in the market for Government debt.  Prices of the Notes rose, and yields declined, for a third straight day.  This should have a downward effect on rates for mortgages and other consumer loans.  The demand for the two-year notes was very strong, with bids being entered for three times as many notes as were available.  It was also noted that foreign buyers accounted for almost 70% of the bidding.

US Dollar Still a Good Bet for the Russians

06/15/09:  According to Russian Finance Minister Alexei Kudrin, the US dollar is still the best candidate for the World's reserve currency.  In an interview given in Lecce, Italy last week.  Foreign countries now hold combined reserves amounting to $2.8 trillion US Dollars and Treasuries. Michael Woolfolk, who is a Senior Currency Strategist at Bank of New York indicated that no other currency has the liquidity and the depth of trading markets. 

After a brief tumble, the Dollar has started to regain it's footing in international currency trading.