Google and Gold race towards $850, a worrisome contradiction

Google’s stock price and the price of gold are both racing towards $850, the historic high for gold, hit in 1980. At the moment, gold is ahead, briefly crossing $800/oz today, while Google stock is hovering around $700 per share. Gold looks closer, but I would be loathe to bet on which (if either) will be first to the line.

But what a very odd race, for it so neatly captures this moment of profound uncertainty. Dicken’s famous opener, “It was the best of times, it was the worst of times,” barely begins to capture the schizophrenia behind this improbable race to $850. Times are great, and Google is leading a nervously bullish market upwards. Times are terrible and that is fueling goldbug fever, driving gold into the stratosphere.

And meanwhile, the compass is spinning wildly, pointing in all directions: The Dollar is at a historic low against the Euro (a bad thing), but unemployment also is down (a good thing). Crude prices closed today at a record $94.53 and surely will cross $100 in the near future. Such a price was forecast to be apocalyptic for the US economy, but so far at least the race-up hasn’t seemed to hurt economic growth, which has rebounded a bit compared to earlier this year. The mortgage market is in meltdown, consumer confidence is at a two year low, and yet Apple can’t make iPods and iPhones fast enough to meet demand. The Iraq war is burning Dollars as it lurches towards some sort of ambiguous end.

In short, change is clustering at the schizophrenic extremes. And as a forecaster, I know that when change clusters at the extremes, it is a powerful indicator that much more fundamental change lies ahead. Listen carefully and one can hear the doppler whistle of something approaching and it isn’t merely the hubub over the rising price of Google — or gold. Perhaps we are about to break through into the so-called “New Economy,” but I fear we are headed the other way as the myriad problems of the last decade finally catch up with us.