In late 2007, we introduced a proprietary indicator called the "gold to HOG" ratio. Sounds fancy, but all we did was plot the price of gold versus the share price of motorcycle icon Harley-Davidson, symbol HOG. We introduced this ratio to track the flight of money out of expensive toys purchased on credit and into gold, which represents real, timeless wealth.
After introducing the ratio, gold soared and HOG crashed, and the ratio of "gold up, HOG down" worked out just as we thought it would. This ratio tracked our idea so well in 2007 and 2008 because consumers were buying less "landfill stuffing" on credit. Harley's profits and stock price plunged.
Now… considering we've profiled the "E-Z-Credit" boost that has lifted restaurant shares, copper, and home improvement stores, shouldn't we check in on our old friend HOG?
As you can see, HOG is enjoying the E-Z-Credit stimulus as much as anyone. The company just surprised Wall Street analysts with a solid quarterly update. The "gold to HOG" ratio has eased back… and HOG shares have climbed 50% in just the past two months. Now let's all get down to the dealership to buy another $20,000 bike.
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