Gold prices and the "new" misery index

There are some things from the 70's that I would just as soon forget.

Farah Fawcett is not one of them, but the misery index definitely qualifies.

Created by economist, Arthur Okun, the misery index was calculated by adding the unemployment rate to the inflation rate. Naturally, the higher the number turned out to be the greater amount of "misery" there was.

But as it turned out, the misery index wasn't just some tool used by economists to put a hard number on the suffering. In the hands of James Earl Carter, it became a ticket to the White House.

During the Presidential campaign of 1976, candidate Carter made frequent references to the Misery Index, stating that no man responsible for giving a country a misery index that high had a right to even ask to be President.

Of course, he was referring to President Gerald Ford who presided over an economy that delivered a score of almost 14% during the campaign. In May of that year the inflation rate was 6.2% while unemployment stood at 7.40%.

The rest, as they say, turned out to be history as the Carter years soon began. History provided the crack, and Carter waltzed right through it.

However, by the election of 1980, Carter's own words had come back to haunt him as he lost in a landslide to Ronald Reagan. Under Carter the Misery Index had reached an all-time high of 21.98% giving a whole new meaning to the word ‘malaise".

Unfortunately, some 32 years later history might be on the verge of repeating itself again. A brutal housing bubble has given birth to a whole new set of misery indicators-helping to elect another President fighting to push back the tide.

The New Misery Index

The new indicators are bankruptcy filings and foreclosures. And how the Obama Administration manages to deal with them will likely set the tone of the next fight for the top job.

So where is the misery to be found these days? According to MSN Money it's all around us.....

Here's a look at the toll that 2008 took on households across the country.

State	Bankruptcy #'s	Foreclosures	Households	% of households
Nevada	18,337	34,417	1,102,379	4.8%
Michigan	53,887	87,210	4,527,655	3.1%
Georgia	60,443	59,057	3,961,474	3.0%
Ohio	57,336	89,979	5,064,900	2.9%
California	130,503	249,513	13,308,346	2.9%
Colorado	20,934	39,403	2,127,156	2.8%
Tennessee	47,114	25,914	2,724,729	2.7%
Florida	66,329	165,291	8,718,385	2.7%
Indiana	37,795	27,980	2,778,394	2.4%
Illinois	54,793	64,310	5,246,005	2.3%
Arizona	19,145	38,568	2,667,502	2.2%
Missouri	24,767	23,492	2,647,274	1.8%
Utah	9,243	7,438	925,242	1.8%
New Jersey	26,120	31,071	3,499,406	1.6%
Alabama	29,131	5,572	2,137,018	1.6%
Maryland	17,473	18,879	2,318,456	1.6%
Arkansas	13,636	6,406	1,287,429	1.6%
Idaho	5,220	3,640	631,071	1.4%
Connecticut	8,121	11,860	1,438,436	1.4%
Kentucky	21,011	5,105	1,906,096	1.4%
Virginia	28,212	16,307	3,274,394	1.4%
Texas	43,489	84,469	9,432,672	1.4%
Rhode Island	4,217	1,838	450,884	1.3%
Washington	21,452	15,184	2,744,069	1.3%
Wisconsin	21,121	12,133	2,560,099	1.3%
Oregon	12,440	8,461	1,609,595	1.3%
Nebraska	6,471	3,636	780,804	1.3%
Massachusetts	16,250	17,737	2,722,190	1.2%
North Carolina	22,393	29,101	4,125,308	1.2%
Minnesota	16,466	11,557	2,304,467	1.2%
Oklahoma	10,858	8,256	1,623,010	1.2%
Delaware	3,473	999	388,616	1.2%
New York	46,202	38,688	7,939,846	1.1%
Mississippi	11,948	1,409	1,254,908	1.1%
Louisiana	15,113	3,968	1,859,179	1.0%
Pennsylvania	35,521	16,379	5,477,864	0.9%
Kansas	8,711	2,434	1,219,439	0.9%
Iowa	7,967	4,103	1,329,596	0.9%
New Mexico	4,481	2,994	862,067	0.9%
New Hampshire	3,868	1,238	594,052	0.9%
Alaska	877	1,332	282,234	0.8%
Montana	1,826	1,150	435,533	0.7%
West Virginia	5,226	460	882,685	0.6%
South Carolina	8,446	4,247	2,021,947	0.6%
Hawaii	2,078	966	506,737	0.6%
District of Columbia	856	777	284,221	0.6%
North Dakota	1,341	250	310,548	0.5%
Wyoming	830	356	242,332	0.5%
Maine	2,966	286	696,611	0.5%
Vermont	1,256	29	311,434	0.4%
South Dakota	1,437	24	357240	0.4%

Source: U.S. Census Bureau, RealtyTrac and Automated Access to Court Electronic Records

The Answer to the Misery Index

Needless to say, that's something of a tall order-even for Obama.

As a result, the misery index lives on and once again it seems to have a life of its own.

Beyond that I just don't see how it's possible to print our way to prosperity—even though that's what they're essentially planning to do.

Personally, I'd prefer "Charlie's Angels" reruns any day.

Of course, the misery index isn't the only thing to make a comeback from the 70's. Gold is soaring just like it did 30 years ago.

Economic concerns have once again driven investors into the metal, pushing it higher even as other commodities have tumbled. That has helped the stocks of gold-producers almost double in the past three months.

In fact, our own precious metals expert Greg McCoach says gold could top $2,000 an ounce in the years to come as the new misery index goes even higher.

So break out the Jiffy Pop and the bell bottoms if you like. Just keep an eye on gold while you're at it.

Long term it is headed higher.

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