The Dow and Gold
By: Charleston Voice
-- Posted Sunday, 29 October 2006
It's been close to 25 years since an investor could have "bought" the Dow Jones Index for an ounce of gold. Yes, that's right. Back in 1979-80 when the Dow went below 1,000, gold was hitting $850. After correcting from that level, the ratio went as high as 45. So, hey, look at where we are now.
So, if you'd plopped your cash down to buy the Dow in 2001 (not shown in graph) you would paid over 42 ounces of gold for those equities. Now, today, the Dow will cost you only 20.12 ounces of gold after going as low as 16 in May - a ratio level not seen since 1996!
What we're liking here is the Ratio reversal from a 'strong' Dow and 'weak' gold which has prevailed since May to a trend reversal which will make the Dow even cheaper in gold terms.
Look at these technicals! The MACD bars began their turn-down nearly three weeks ago. The SlowSTO darker trend line is crossing over. Whenever that index level of 80 is pierced I look to the exits.
This is not to make the case for a lower Dow, but that stocks will be cheaper for the investor holding gold. In effect, both gold and the Dow could appreciate, only that gold will appreciate more.
The point is: if you're still hanging on to some stock losers, this Dow rally has occurred within a cyclical bear market for equities. This is an ideal time to do some portfolio housecleaning, clearing out your laggards & losers, and going with gold/silver.
With the international bankers in firm control of America's destiny, it's not going to matter a whit which party sits on the throne. All we can hope for at this juncture is for the Democrats to be bumbling in setting up their own feed chain. It does take time to set up a new crime syndicate.
-- CV
news.goldseek.com |
