Will the Dow and Gold ever catch up?

Konahead

I have read alot of differenct opions about the gold to dow ration lately. Very mixed. What say this forum!

DoubleEagle59

They will definitely catch up to each other.

That is, the Dow will equal one ounce of gold (1:1 ratio).

By the way, when this happens, it will signal the time to get out of PM's and get back into the Dow.

Wingsrule

59,

When you state "when they equal each other", are you using the DJIA number (currently about 10,600) or do you mean the true summation of the 30 individual components, without taking the ever-changing divisor into account?

Mark

DoubleEagle59

DJIA number (currently about 10,600)

Wingsrule

Thanks.

RedHerring

<< <i>...without taking the ever-changing divisor into account? >>



-------------------------------------------------

The divisor is subect to manipulation as much as anything else.

With the current ratio at 9:1, there's a lot of catching up to do. A 2:1 Dow:Gold ratio seems much more likely, perhaps as soon as late 2011.

A 1:1 ratio would mean the ultimate SHTF, which is possible but not probable.

ksammut

Yes, gold will be heading over $5000 while the Dow falls from its present level and falls under $5000.This will happen when the realization has finally hit that there is no way the US (and many European Countries) will be able to pay its growing national, Federal, state, and local debt no matter how much they tax. When the bank failure rate snowballs thanks to exploding commercial and mortgage defaults. Credit will get even tighter. Jobless rate will jump higher. Etc., etc.

This weeks treasury auction and the auctions that follow will be amazing large in size. Eventually, the US will be the only one buying its own debt (wish I could do that - actually, I am glad I cannot). Dollar collapse, monetary inflation, a basket of currencies with gold the main fixture, fill in the blank may come.

We will get to see history being made and that will be a very sad thing for so many people. Governments will do desperate things and when desperate people or governments do desperate things, 99.9% of the time, things only get worse.

My crystal ball does not tell me exactly what will happen and when it will happen (even though I shined it up and put 25 cents in the slot), but to believe all will be well if we continue to follow the current course is either foolish or putting your head in the sand time.

I love our country but in trying to create a country where everyone can have it all without paying for it as we went, is finally coming back to cut our legs out from under us. Many in the depression lost it all (my family among them) but others who saw it coming became very wealthy. PMs and mining stocks can soften the pain for those who see they need insurance against the strong possibility that things are going from bad to worse. At worse, it will help you keep your heads above water. At best, you may become wealthy.

Some on this board do not believe in all this doom and gloom. A few years ago, I would have not believed it too. My answer would have been, this is the United States, we will find a way to fix these problems. When I looked at the increasing debt, the future liabilities of Social Security, Medicare, Prescription Drugs, and other programs, there is not enough money being made by our citizens to be taxed to pay for everything.

Add the ongoing cost of protecting our country from terror, our national debt, lower tax revenue, GDP which will not be strong enough to earn our way out of this mess, and it became apparent to me that the fat lady would be signing soon. That is when I began to purchase PMs and in the past 10 months, mining stocks. If I am right, I have done what I can to protect my family. If I am wrong and this wonderful country finds a way out of this mess, the insurance of having PMs would have still been a great investment as it has given my family peace of mind.

This is only my 200th post on the Collectors Universe Boards as I spend more time reading than posting. I have learned a lot from many of you. I want to take this time to say thank you.

Ken

Konahead

It appears to me if we hit the 1:1 and either the gold goes way up or dow comes way down let's say 5000. Thinks are going to get pretty ugly around here when that happens. Does anyone see this happened in the next 5 years, 10 years, 20 years? This is all very alarming and I just don't think the America I grew up in will ever be the same again.

RedHerring

<< <i>Does anyone see this...in the next 5 years? >>



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Not many, but a few do. 10 years from now when we're out of bullets?

DoubleEagle59

<< <i>59,

When you state "when they equal each other", are you using the DJIA number (currently about 10,600) or do you mean the true summation of the 30 individual components, without taking the ever-changing divisor into account?

Mark >>



it's happened before, it'll happen again,

take a look........



going from left to right:

when the slope is rising: this means get out of gold and get into the stockmarket.

when the slope is falling: get out of the stockmarket and get into gold.

roadrunner

Yes.....maybe not 1:1 but certainly something in the low single digits is coming within the next 2-5 years. Some analysts are figuring on less than 1:1 (ie 1/2:1) since the waveform the DE59 posted is expanding and the cycles are getting more manipulated, hence a bigger snap-back. If one looks at that chart and compares today to the 1970's, the ratio is potentially right at that point of falling off the cliff.

roadrunner

Norseman88

<< <i>They will definitely catch up to each other.

That is, the Dow will equal one ounce of gold (1:1 ratio).

By the way, when this happens, it will signal the time to get out of PM's and get back into the Dow. >>



I agree IF this happens you better get out of your Gold and start buying equities. I'm not so sure it will happen but i do know that Silver will have ridden Gold's coattails and I will sell much of my holdings and buy stocks.

dontippet

If I'm calculating it right, it was under 7 in March of 2009 (6500 Dow and $930 gold).

DoubleEagle59

<< <i>Yes.....maybe not 1:1 but certainly something in the low single digits is coming within the next 2-5 years. Some analysts are figuring on less than 1:1 (ie 1/2:1) since the waveform the DE59 posted is expanding and the cycles are getting more manipulated, hence a bigger snap-back. If one looks at that chart and compares today to the 1970's, the ratio is potentially right at that point of falling off the cliff.

roadrunner >>



I too, think that the ratio will go below 1:1, due to the added present day excesses, compared to the last time it was 1:1.

Whether or not I will hold PM's beyond a 1:1 ratio is a different matter.

RedHerring

<< <i>...it's happened before, it'll happen again... >>



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I see the 1:1 at Jan. '80 on the chart. Does it hit that elsewhere?

gsa1fan

1931?

DoubleEagle59

<< <i>1931? >>



I think in 1931, it didn't quite get to 1:1.

Looks like about 2.5:1

Whether or not our present day situation is going to get to a ratio of 1:1 is up for debate.

But one thing is clear:

With our current financial mess still not sorted out and our eventual 'higher inflation' scenario still to play out, Our current ratio of 9.2:1 (which is 10,600 Dow divided by $1150 Gold) will definitely get smaller. Even if it only gets to 4:1 the writing is on the wall.....

Given these facts, it's a no brainer to get out of the stockmarket and get into Gold.

RedHerring

<< <i>...it's a no brainer to get out of the stockmarket and get into Gold >>





Agreed - I'm holding about 30 ozs in U.S. gold coins and fully expect to see $1500/oz within 2 years.

Beyond that? Nobody knows but I want $1,500 to sell. Sold about 10 ozs at $1200 and proceeded to get right back in at a touch under $1200.

I've got $26K in my 30 ozs right now with several PCGS MS Eagles/Double Eagles mixed in.

DoubleEagle59

<< <i>

<< <i>...it's a no brainer to get out of the stockmarket and get into Gold >>





Agreed - I'm holding about 30 ozs in U.S. gold coins and fully expect to see $1500/oz within 2 years.

Beyond that? Nobody knows but I want $1,500 to sell. Sold about 10 ozs at $1200 and proceeded to get right back in at a touch under $1200.

I've got $26K in my 30 ozs right now with several PCGS MS Eagles/Double Eagles mixed in. >>



You're going to sell at $1500?

That means if you sell at the bottom, then the DJIA will drop to 1500.

I don't know if the Dow's going to drop to that figure.

The day you decide to sell (at $1500) figure out the ratio just for kicks. If it's only 7:1 (or around there) you may be selling too early.

I really should mind my own business and not give advice, but I can't help it sometimes. I'm just so darn sure of this ratio getting to 1:1 that I'd hate to see fellow PM bulls sell too early.

ProofCollection

May I reminde everyone that the Dow is far different than it was in years past... Not that it matters, just want to remind everyone. It's not your father's Dow.

DoubleEagle59

<< <i>May I reminde everyone that the Dow is far different than it was in years past... Not that it matters, just want to remind everyone. It's not your father's Dow. >>



True,

but in the year 2000 (not your Father's Dow), the ratio was 40:1,

now in 2010, it's about 9:1,

given this drop, a ratio of 1:1 can't be unrealistic.

RedHerring

<< <i>You're going to sell at $1500? >>



Not all of it. Maybe 10 ozs or so. I don't want to get greedy and see $1500 coming in 2011.

I do believe $2K is in the cards but perhaps a few years off.

Konahead

<< <i>

<< <i>May I reminde everyone that the Dow is far different than it was in years past... Not that it matters, just want to remind everyone. It's not your father's Dow. >>



True,

but in the year 2000 (not your Father's Dow), the ratio was 40:1,

now in 2010, it's about 9:1,

given this drop, a ratio of 1:1 can't be unrealistic. >>




My fear is what will the economy look like with a 1:1. Glad I have my shinny nest egg.

clouisejewelers

<< <i>May I reminde everyone that the Dow is far different than it was in years past... Not that it matters, just want to remind everyone. It's not your father's Dow. >>



You are exactly right. Our Father's Dow consisted of companies that made products(physical or intellectual) everyone wanted to buy. Today's Dow consists of companies that sponge off the productive efforts of the few real companies left and take a cut of the profits. They don't really produce anything, just shuffle other people's money around and take a huge cut. In other words, they are parasites that are rapidly killing the host. Hence, the Dow/Gold ratio may fall even under one!

gsa1fan

All the derivatives in the market sound like a cancer/time bomb.

To many market plays floating around with NO actual backing.

57loaded

DoubleEagle59 if the DOW and gold gets to 1:1 or even 1.25:1

i will toast you with (in today's U$D ) with a shot or four of