The Unrestrained Reflation Of Today’s Stock Bubble

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The appears unstoppable. It is setting all-time records on a daily basis.

On the other hand, the number of keyword searches for the term ‘stock market bubble’ has never been higher. The number of term searches is two times greater than in any other month over the last 16 years.

Monthly Keyword Searches For

Monthly Keyword Searches For

Are investors finally waking up to the fundamental insanity? The price-to-revenue metric for stock valuation here in February of 2021 is bounds and leaps above what it was during the 2000 tech bubble.

S&P 500 - Price To Sales Ratio Chart

S&P 500 – Price To Sales Ratio Chart

Are participants troubled by the extraordinary amount of leverage that some folks are employing to juice returns? Three of the worst stock bears (50% losses) in market history — 1973-1974, 2000-2002, 2008-2009 — occurred when margin debt spiked for nine months.

Leveraged Speculation In Equities

Leveraged Speculation In Equities

Or maybe people are beginning to pay attention to the waning percentage of individual securities that are outperforming the mega-cap weighted S&P 500: Facebook (NASDAQ:), Amazon (NASDAQ:), Apple (NASDAQ:), Google (NASDAQ:), Tesla (NASDAQ:), Microsoft (NASDAQ:). Can’t beat the top-heavy index.

Perhaps ironically, the last time that the phenomenon was this pronounced? Before the 73-74 disaster and the 2000 tech wreck.

Percent of Stocks Beating The S&P 500 In Trailing 12 Months

Percent of Stocks Beating The S&P 500 In Trailing 12 Months

Maybe the stock market bubble can reflate without rupturing. Or maybe the massive money printing experiment alongside unchecked government fiscal stimulus will end in tears.

Either way, one can anticipate fiat currency depreciation and inflation. That should benefit gold.

On government Consumer Price Index (CPI) data alone, is likely to push well above $2000 per ounce towards $3000 per ounce. And with genuine inflation dramatically understated by government CPI statistics, gold is even more likely to skyrocket. $4000 or $5000 is quite realistic.

Gold Vs CPI Chart

Gold Vs CPI Chart

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