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The ratio of the Dow Jones to Gold price is the same now as 1928 (chart)
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This Link is located in the Public Channel Housing Bubble and Bear Links.
Posted by ian 1 year 336 days ago (myprops.org). Views: 3,708
Tags: wall street gold stocks |
| Related Tags: finance economics business video forbes infesting inflation bailout |
The slump in stock prices compared with Gold pushed the Dow/Gold ratio down from its all-time top above 42.2 to just 12.6 in March of this year.
That's pretty much exactly the Dow/Gold average of the last eighty years. So which way will the ratio go now?
The Fed's new "reflationary melt-up" is clearly designed to keep stock prices buoyant. But it's only adding to the Case for Gold, too. "I would be very surprised if the Dow Jones Industrials/Gold Ratio didn't decline to between 5 and 10 within the next three years," said Marc Faber of the Gloom, Boom & Doom Report recently.
If that call proves right, it might come thanks to Gold Prices doubling, or stock prices halving, or more likely some combination of both. But while the three peaks to date – of Aug. 1929, Jan. '66 and then late '99 – took the Dow/Gold's top higher, the floor only held steady, down there at two ounces of gold and below.
And the last slump – during the inflationary 1960s and stagflationary '70s – took a full 14 years to work itself out. So far in this bear market for the Dow/Gold ratio, we're nine years through to date.
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ian said |
| 1 year 336 days ago |
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