Karl Denningers recent S&P video, DOW:GOLD 3,500?

konsole

For those that missed Karl Denningers recent video(s) on the similarities the S&P now compared to the recent past, here is one of them...

link

In it he basically does a cut and paste of the time frame between the March 2009 low and running back about 2 years or so, and pastes it over a similar pattern we are having now. Of course the observation he made may be completely off from what is going to actually happen but I thought it was interesting enough to do some basic calculations. This is what I calculated out after watching the video...

S&P 500/DOW:

High 9/2010 - 1225/11,600
Low 10/2010 - 1075/10,200
High 11/2010 - 1175/11,200
Low 12/2010 - 950/9,000
High 4/2011 - 1100/10,500
Low 6/2011 - 875/8,300
High 7/2011 - 950/9,000
Low 11/2011 - 375/3,500

I had to estimate the last number because it was a bit off the chart. I could be a month or two off with all the numbers because its not a very high quality video. Also the chart was of the S&P so I calculated the DOW based on it being roughly 9.5x the S&P.

I know there are people out there that claim the DOW will get to be 1:1 with gold and that late 2011 of $3,500 could very well be the time and place. Based on this it appears as though anytime between later this month and maybe early November we could see the high for the forseeable future and the DOW will ultimately bottom out somewhere around late 2011 around 3,500. DOW drops of around 2,000 points could start around November of this year and then again in March of 2011, then the final gigantic fall starts around mid year 2011.

screenshot after Karl copy and pasted...

OPA

I think I've seen similar charts since 2008, that predicted similar fates for 2009 & 2010. In my opinion, Denninger is another "net kook."

yellowkid

I just don't have any faith in technical prognostications, I think they are useful for explaining what happened, after the fact.

jmski52

I just don't have any faith in technical prognostications, I think they are useful for explaining what happened, after the fact.

roadrunner

Bullion gold got tossed out in quantities during the 2008 meltdown as the sheeple were not yet believers in it. I don't expect it to be tossed out in the same percentage as it was if there should be another deleveraging event. Therefore I don't agree that the Dow/gold ratio will stay in the 8-11 range should another deflationary melt down occur. I would expect gold to hold up a lot better than the Dow, possibly on the order of 50% better....hence a Dow/gold ratio of 5-1 or 6-1 or 3500 Dow, 600-700 gold. I don't see 9.5 Dow/gold should another deflationary event occur. How could the Dow hold up as well as a money substitute on the next big drop? Using a chart pattern from 2008 after the world has learned many new lessons about derivatives, PM's, etc. doesn't quite make sense, especially when that was a once in a century drop. It's like comparing charts to the 1930's and expecting gold to behave the same way should similar patterns develop. So 2 yrs later we're going to have another once in a century drop in the exact same proportions of Dow to gold?

roadrunner

jmski52

It may be that many people still don't understand what money is, thinking that the dollar and the stock market have some guarantees attached. They don't, and neither does gold.

It's hard to extrapolate anything when the rules change. We don't know how all of these changing variables will interact and which variables now constitute a trigger or even what type of mechanism the trigger belongs to.

ttown

It wouldn't surprise me if they meet around 10k to 12k due to massive inflation of all fiat currencies. The dollar will go somewhere when we march out of bonds and CD's more than likely it'll be the stock market.
It certainly could go the other way but we're in un-charted territoriality as far as I'm concerned. We certainly not in any type of standard to keep currencies under control like the past and many will be after high paying dividend commodity type stocks that have real value. JMO

roadrunner

It may be that many people still don't understand what money is, thinking that the dollar and the stock market have some guarantees attached. They don't, and neither does gold.

Gold has one guarantee over 3,000 years and that is that it won't go to zero. History has already shown that every fiat currency has eventually gone to zero.

roadrunner

jmski52

Gold has one guarantee over 3,000 years and that is that it won't go to zero. History has already shown that every fiat currency has eventually gone to zero.

The government could declare that all personal accounts be carried on smartcards as currency if this fiat thing doesn't work out. Heck, combine health care records with mortgage and employment records and it would be a "snap" to redistribute income and benefits - if you're into that sort of thing.

I don't see that happening in my lifetime, but I wouldn't put it past some of those idiots in government to think of something like that as a good idea.

We may not have to wait the whole 3,000 years to see the value of gold (or silver).