Spam, Guns, Gold ‘Bizarre’ Confidence Indicators: Chart of Day

Date: February 26, 2009
Source: bloomberg.com


Feb. 27 (Bloomberg) -- Guns, gold and Spam, the canned meat made by Hormel Foods Corp., create a “bizarre indicator” of crushed consumer confidence, Loop Capital Markets LLC said.

“A growing number of Americans are stocking the basement with Spam and marketable gold, while they peek out from behind the curtains with their firearm of choice,” analysts led by Chris Mier in Chicago wrote in a Feb. 26 note. “Hormel’s plants are now running on weekends to keep up with demand.”

The CHART OF THE DAY shows the year-to-date returns of gold, shares of gunmaker Sturm, Ruger &Co. and Spam-producer Hormel compared with the Standard &Poor’s 500 Index. Also shown is U.S. consumer confidence, which slumped this month to the lowest since records began in 1967.

“If people believe the end of the world is coming and we’re in for anarchy, people are going to load up on weapons and Spam for their fallout shelters,” said Tim Ghriskey, who helps oversee $2 billion as chief investment officer for Solaris Asset Management in Bedford Hills, New York. “The most popular one is gold when there’s no consumer confidence, when there’s no confidence in the markets.”

Sturm Ruger’s fourth-quarter revenue jumped 72 percent, and sales have also increased for competitor Smith &Wesson Holding Corp., said Eric Wold, an analyst at Merriman Curhan Ford &Co.
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