Without any great fanfare, gold is poised to break above $1000/ounce, right now at $986 after a steady drift upward this week. Maybe we’ll come in tomorrow AM and see new highs.

According to Bloomberg, The SPDR Gold Trust, a gold backed security, is now the seventh-largest holder of gold, after the International Monetary Fund and the governments of the U.S., Germany, France, Italy and Switzerland. As of yesterday that security had 1,008.8 metric tons. The unabating hunger for gold among currency-fearing investors is going to push SPDR holdings steadily up in the league tables of gold holdings, so that SDPRs now account of more gold than the reserves of the Central Banks of Japan and the UK put together.

$1000 is a big psychological hurdle and surpassing it will undoubtedly spark some headlines — maybe the cover of Business Week with a headline “How High Gold?” — but the historic high in dollars is $1030, reached last July. (Gold’s explosion won’t be over until Business Week’s headline is “Gold Back to the Future: next stop $3000?”)

More important than the $1000 hurdle, it’s important to know that gold is at unprecedented levels versus the Euro and Sterling, two currencies that being sucked into a whirlpool of capital flight.

What’s interesting about watching gold trade is that, historically, gold’s fan base is mostly freaks and black helicopter paranoids. “Gold bugs” are usually déclassé, moonshine and trailer parks to Wall Street’s Dom Perignon and Park Avenue. Once every hundred years, the crazy folks are right.

I want to remember to watch this later…

The Germans are going to step in and backstop all Europe’s sloppiest economies. Imagine being a prudent budgeteer who is forced to pool a family budget with 20 of your neighbors, but having no voice in how they spend their money. How quickly do you think the credit card debt would add up?

German Finance Minister Peer Steinbrueck said euro-region countries may be forced to bail out other members of the 16-nation bloc that face problems refinancing their debt.

“Some countries are slowly getting into difficulties with their payments,” Steinbrueck said late yesterday in a speech in Dusseldorf. “The euro-region treaties don’t foresee any help for insolvent countries, but in reality the other states would have to rescue those running into difficulty.”

While declining to identify countries facing problems, the German finance chief said Ireland, which has a widening budget deficit, is in a “very difficult situation.” Ireland’s debt- rating outlook was cut by Moody’s Investors Service Jan. 30.

Usage of the term “since the great depression” among documents indexed on Google, now clocking in at 5,600,000, is up almost 10-fold since September.

We’ve got 90,400 instances of “worst since the Great Depression” and 9,160 instances of “longest since the Great Depression.” But zero instances of “weirdest since the Great Depression.” Until now, of course.

Robert Shiller, the great real estate bear, lectures…

More securitizedgold hoarding reported by the FT:

Investors are buying record amounts of gold bars and coins, shunning risky assets for the relative safety of bullion amid renewed fears about the health of the global financial system.

The US Mint sold 92,000 ounces of its popular American Eagle coin last month, almost four times that which it sold a year ago and more than it shipped during the whole of the first half of 2007.

Other countries’ mints have also reported strong sales. “Large purchases of coins are perhaps the ultimate sign of safe-haven gold buying,” said John Reade, a precious metals strategist at UBS.

Inflows into gold-backed exchange traded funds surged in January, pushing their bullion holdings to an all-time high of 1,317 tonnes. Last month’s flows of 105 tonnes were above September’s previous record of 104 tonnes, and absorbed about half the world’s gold mine output for January, said Barclays Capital.

“We estimate that investment demand [into gold] could double in 2009 compared to 2007,” said Mr Reade. “Purchases of physical gold have jumped over the past six months as investors’ fears about the current financial crisis … have intensified.”

With slim opportunity costs (nearly zero current cost of carry) and no obvious fungible substitutes (unlike XOM for CVX, for example) and no value other than the perception of its value, gold is the ultimate self-fulfilling prophesy. In short, gold is the next bubble.

Earlier this week Nick Denton suggested that “from conglomerates to internet ventures, executives should be planning now on a decline of up to 40% in advertising spending during this cycle.” He was quoted as saying “Anyone who isn’t prepared for ads to go down 40 percent is crazy.”

Crying wolf?

Some think Denton is crying wolf, trolling for links. One biz journalist told me, “even in the Great Depression, when GDP fell 50% and unemployment reached 25%, advertising only fell by 50%.”

Unfortunately, I think Denton’s got it right. (Mostly.*) Even mild downturns can devastate the ad industry. During the recession of 2001, when GDP turned barely negative for a couple of quarters, ad spending dropped nearly 10%.

And in the first year of the Great Depression, when GDP fell by 10% and unemployment went from 3.2% to 8.7%, newspaper ad lineage dropped by 29%. But that’s just a raw count of ad space, not dollars spent, so the figure doesn’t account for the discounts and freebies that were surely rampant in a market turning from boom to bust. So, in real terms, the decline was more likely on the magnitude of 50 or 60% even in the first “mild” year of the Depression. (Checking newspapers’ books would be one way to see what the real numbers were, but 10 minutes of Googling didn’t turn up anything.)

The Macro Economy turns Micro

Until we see more data and a firm trend line sideways rather than down, we should all err on the side of extreme caution in projecting sales. The macro-economic fundamentals just get uglier with each passing week. The only good news, and it’s a sick flavor of good news, is that banks are not failing. Every other indicator is bleak. In recent weeks, we’ve seen consumer confidence hit an all time low (38, down from 61 the prior month); learned that factory orders were off 2.5% in September, reflecting just half a month’s credit freeze; seen auto sales plunge by 30-40% year over year. We’ve seen countless layoffs at industrial companies, and significant budget cutbacks at media companies like NBC, CBS, Sony. Foreclosures can only go higher as more people get laid off. Over-leveraged under-invested consumers can only increase their savings rate, not consume more.

(I realize this pessimism comes despite the fact that that stock market has traded sideways since September — if you can call oscillating up and down 10% a week sideways. We can ignore the stock market. Most stock analysts and investors, busy looking in their rear view mirrors, are only revising downward past earnings estimates by some fixed percentage, rather than creating entirely new valuation models to take into account how radically maimed the economy is. Anyone buying now thinks the average stock is cheap relative to last year’s prices, rather than understanding that today’s price is expensive relative to next year’s dividend cuts and potential bankruptcies.)

It’s clear that the post-bubble economy will be far tougher and weirder than any of us have ever experienced. In theory, Internet advertising will not be hurt as much as other mediums because it cheaper and more measurable. But advertising, whether online or not, is a discretionary budget item and therefore extremely easy to eliminate in a downturn. The reality is that when agencies fire whole teams and clients put all ad buys on hold, every media company will suffer.

There’s always lots of noise in measuring a sales pipeline. Total contract signings per month fluctuate up and down. Individual deals are so heterogeneous it’s impossible tell whether a delayed order or hearing “the budget was cut” is signal or noise. And it’s hard to know whether the individual buyers we know lose their jobs just because of normal turnover or because their entire division is undergoing a mandatory downsizing. But, viewing all the data together, we know everyone is experiencing a dramatic slowdown.

In short, Nick’s 40% sounds entirely reasonable to me. And 60% seems possible. Most importantly, 15-20%, the current “extreme” position for media analysts, seems unlikely.

The future for blogs and Blogads

The good news for indy bloggers and Blogads: our competitors — with higher overheads, less skin in the game, higher turnover and less devotion to the connecting advertisers with bloggers — will suffer more than we. Eventually, as competitors like NYTimes, TMZ, HuffingtonPost, OMG, Buzznet, TheAtlantic, Blogher, People, Myspace, Newsweek and Glam fold, scale back or lose their staff to greener pastures, ad buyers will spend more than ever with indy bloggers and Blogads.

But this will come only later in the game, after everyone has bled for a while and many have fallen. What should we do in the meantime? At a corporate level, we’re conserving cash to ensure a cushion against the bleak times ahead. While we’re looking for places to economize — evening leaving the corporate jacuzzi unheated — we’re also still expanding. On the programming side, we’re continuing to create new tools and products that will help advertisers and bloggers. And on the sales side, we’re putting even more resources into building relationships with current and potential clients. We see small pockets where there’s potential for tremendous growth next year, and we’re busy working to capture those opportunities. Our staff get annual bonuses rather than monthly commissions, which means we’re each incentived to invest in relationship-building even when sales volumes fall or good contacts lose their jobs temporarily.

Overall, I’m confident that we’ll gain market share and mind share during the downturn, and that we’ll be positioned to pillage and plunder when the economy turns.

* Denton is wrong to fret about political advertising. More on that another day.

Unemployment claims spiked this week into territory not seen since the 80s. “In the week ending Nov. 8, the advance figure for seasonally adjusted initial claims was 516,000, an increase of 32,000 from the previous week’s revised figure of 484,000. The 4-week moving average was 491,000, an increase of 13,250 from the previous week’s revised average of 477,750.”

In the week ending Nov. 1, the advance figure for seasonally adjusted initial claims was 481,000, a decrease of 4,000 from the previous week’s revised figure of 485,000. The 4-week moving average was 477,000, unchanged from the previous week’s revised average of 477,000.

Factory orders fell 2.5% in September from August levels, the Commerce Department reported this AM. The credit freeze began in mid September, so a full month’s figure might be 5%… or 10%? A 5% decline in one month is catastrophic.

Nonetheless, the market is up sharply. This is most likely reflects the fact that investors and traders, after months of fretting, are anticipating a clean Obama victory. That’s what is already reflected by gamblers, who will, if McCain wins, give you $650 for every $100 you bet on Obama.

But if the market is sharply higher in anticipation of an Obama victory, the bad news is that the market will likely sell off sharply tomorrow. (Remember always: buy the rumor, sell the fact.)

Tomorrow, after a brief spurt higher, the market will go down doubly hard as it finally digests today’s bleak factory order news and the fact that we now have to sweat out three months with a lame duck president.

Sadly, Fox news, Drudge and other general economic ignoramuses will blaim Obama for that sell-off.

Update 11/05/08: Yep, Drudge took the bait.