Convergence between DOW and gold, as you call it, will result
in a pretty nasty economic environment. Please, note that DOW/gold
ratio has declined from about 43 in 1999 to about 10 at present.
It was as low as 7 back in the Fall of 2008, so we bounced
some.
If you think things are bad now, think again. Yes, excessive use
of the printing press and abandonment of gold standard resulted
in DOW/gold ratio making a new low in about 1980, below its prior secular low of 1932.
Given the monster credit bubble that we've seen, we could
even break that low. It's actually a broadening pattern on a
100 year scale. So, if the DOW could go negative, the target
would be -42. <GGG> This makes little sense, so we use a log.
That way the target would be a 98% decline, from DOW/gold = 1,
or gold/DOW ratio of 43. That environment would be
very Zimbabweish, as that country is now dead last in the
World economically <G>
 |
