Barron's Confidence Index Is Approaching
Depression Conditions Levels
Mark J Lundeen
Mlundeen2@Comcast.net
11 February 2012
I haven't posted the Barron's Confidence Index chart for a while, so here it is. Since 1938, Barron's has computed its CI by dividing their Best-Grade Bond Yield by its Intermediate-Grade Bond Yield to derive the CI. I pushed the series back to 1934 using the yield from the now discontinued Dow Jones 40-Bond Average as a substitute for the Intermediate bond yield; both yield series were very close to each other. I derived my Best-Bond Yield by taking an average yield of ten bonds published in Barron's whose yields were close approximations to the first published value of Barron's Best Bond Yield in their 19 Dec 1938 issue. The Dow Jones 40 Bond Average yield goes back to 1926. Unfortunately, Barron's began publishing corporate bond prices and yields in their 01 Jan 1934 issue, so 1934 is as far as I could go.
The results of my improvised 1934-38 CI are impressive. From 1932-37, the markets saw an excellent recovery from their lows of 1932; so seeing my improvised CI above 80 from 1934-37 is something to be expected. Then from October 1936 to Barron's first published CI value in December 1938, the CI collapsed to 45 as the US economy, and Dow Jones entered into the second deep economic turndown of the 1930s. All-and-all, my five year extension in Barron's CI time-line is a valuable and timely addition to this venerable economic indicator.
More: http://www.gold-eagle.com/editorials_12/lundeen021112.html
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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