Our subject is Gold, but briefly let’s start with stocks as they’re breaking the mold. The S&P 500 marginally broke its all-time closing high yesterday (Friday) in settling at 2874.69: that is 1.82 points higher than the previous such high of 2872.87 set back on 26 January of this year.

“From which you’d said there’d be a 25% correction down to 2154…”

Correctly stated, except that it never happened: swiftly thereafter, the lowest the S&P lurched on a closing basis was -10.2% to 2581.00 on 08 February; a second swoon found it similarly -10.1% at 2581.88 on 02 April, from which it has gradually stair-stepped higher on less tax-ridden earnings.

But the issue nevertheless remains the same: honestly calculate the price/earnings ratio of the S&P 500 by dividing into each constituent’s present price its actual “trailing 12-months” earnings, (conservatively assigning stock prices as the p/e for those 44 companies that don’t have any earnings), multiply each result by the stock’s cap-weighting for the Index and add them all up: your p/e per Friday’s close is (…drum roll…) 50.7x. See you at 2154, the S&P’s 2016 U.S. election “morning after” level.

One speculates that even the President feels fear of falling prices by putting forth that the Federal Open Market Committee is getting a bit carried away in raising their Bank’s funds rate. To be sure, the earningless threat of it all being given back is quite real.

But should the S&P climb higher still, the resulting correction’s percentage simply becomes larger. So from the “A Picture’s Worth A Thousand Words Dept.”, if you’ve non-Gold equities exposure, this snapshot of the S&P 500 from 1970-to-date ought scare the Jabberwocky outta ya … “Go ask Alice”:

Keep in mind that the overnight “lock limit down” for the S&P futures is -5%: which for you “Dow” watchers scoring at home is an opening downtick of more than 1,200 points. Sleep tight.