The one Chart that sold me on the PM bull cycle....

DoubleEagle59

I'm sure many of you know my position on Gold and Silver.

Here is the chart that won me over back when I saw it for the first time in 2000.

I wanted to show you the main reason that convinced me that this PM bull cycle has a long way still to go and that there is a good clue to when it will end.

All the other pieces of the puzzle fit too, such as huge debt, excessive printing of money, easy credit, Central Bank strategies etc..



Even if you ignore what the chart is, but just concentrate on the 'ebb and flow' of the chart, you get a strong sense that the trend is 'down' and that it will reach the bottom, as it did in the two previous 35 year cycles.

When you read the chart and see that it's the 'Dow vs. Gold', you get an idea that Gold is better to invest in than traditional 'Dow' stocks.

Anyways, there are of course other important factors to consider, but I wanted to show you the main reason why I'm so strongly convinced that the price of the PM's still have a way to go (up!!).

Note: if this chart was up to date, the current chart would read an "8" on the right hand scale.

jmski52

Uh, DoubleEagle - would you mind re-posting this every few months or so? For those of us who have a hard time remembering where we put our darned carkeys?

MoneyCollector

If I understand this chart, it shows over time how many oz. of gold it would take to buy the Dow. Its now 8+ish. In the past this was as low as 1.x or so. So, if the Dow stays the same, price of gold could double and the ratio would drop to 4? A rising Dow would be good as it would increase the ratio.

Randy

cladking

A lot of what you're seeing here is demographics.

A great deal of the future is knowable just by looking at the absolute
and relative ages of the population but investors tend to grossly under-
rate the importance of this information.

cohodk

<< <i>A lot of what you're seeing here is demographics.

A great deal of the future is knowable just by looking at the absolute
and relative ages of the population but investors tend to grossly under-
rate the importance of this information. >>



Nice chart. As a broker in the late 90's it was IMPOSSIBLE to sell precious metals mutual funds. Pretty easy to sell them now.

And agreed about demographics. 100% important, IMO.

DoubleEagle59

<< <i>Uh, DoubleEagle - would you mind re-posting this every few months or so? For those of us who have a hard time remembering where we put our darned carkeys? >>



I know I must sound like a broken record playing this idea over and over again.

But honestly, I just can't understand why some people still can't put their financial trust in PM's.

roadrunner

Nice chart of a "possible" multi-decade broadening top formation. That won't be confirmed until the ratio drops even lower than in 1980. Won't be of much help to non-believers by then though. I'd say we're still in the 3rd wave down which could take the ratio to the 3-5 range. Then a rebound. And then the 5th wave down to possibly challenge the all time low.

Demographics play a role, but probably not as large as confidence in the currency.

roadrunner

jmski52

Demographics play a role, but probably not as large as confidence in the currency.

I agree, but we've not seen a baby boomer generation retire yet either. Most of the baby boom generation in the US were spoon-fed stocks & bonds by their company plans and investment advisors. In order to retire, you gotta sell some stuff. Somebody else gotta buy it.

InYHWHWeTrust

RR had posted a link several years ago on the former GS:ECONOMICS thread, very revealing, showing that every dog (PMs or equities) has its day; so, there is time be more in one than the other. The past 10 yrs, PMs are the top dog (I realize there are exceptional traders in equities; there are always exceptions).

Some questions: when the D:G goes to 1, close to 1, or <1, what will the financial landscape look like ... for selling off any discretionary PMs and transitioning over into equities again? (core PMs to be passed down to our responsible heirs) Will WS still be a rigged computer-run casino for the avg guy to get fleeced (but not the brilliant, and hard-working, chart studying full-time select, few prescient & psychoanalytic traders)? Will the banks still have cooked bookery, no Glass-Steagall, and the power of their own printing press (derivatives)? Will anyone have been prosecuted and be serving time? Will USD still have reserve currency status (maybe no one else wants that position) or will it be a trashed currency? Will our gov't still be intact?

DoubleEagle59

<< <i>RR had posted a link several years ago on the former GS:ECONOMICS thread, very revealing, showing that every dog (PMs or equities) has its day; so, there is time be more in one than the other. The past 10 yrs, PMs are the top dog (I realize there are exceptional traders in equities; there are always exceptions).

Some questions: when the D:G goes to 1, close to 1, or <1, what will the financial landscape look like ... for selling off any discretionary PMs and transitioning over into equities again? (core PMs to be passed down to our responsible heirs) Will WS still be a rigged computer-run casino for the avg guy to get fleeced (but not the brilliant, and hard-working, chart studying full-time select, few prescient & psychoanalytic traders)? Will the banks still have cooked bookery, no Glass-Steagall, and the power of their own printing press (derivatives)? Will anyone have been prosecuted and be serving time? Will USD still have reserve currency status (maybe no one else wants that position) or will it be a trashed currency? Will our gov't still be intact? >>



It doesn't really matter what the financial landscape is like.

The important thing will be at 1:1 ratio, stocks will be cheap and gold expensive.

This will be the time to buy stocks and sell gold.

Baley

<< <i>Uh, DoubleEagle - would you mind re-posting this every few months or so? For those of us who have a hard time remembering where we put our darned carkeys? >>



Well, the original chart posted is gone (guess it doesn't support the argument anymore?) and it's been more than a few months since re-posting, but here's an update:

Latest Dow:Gold ratio 12.51 and rising

DoubleEagle59

<< <i>

<< <i>Uh, DoubleEagle - would you mind re-posting this every few months or so? For those of us who have a hard time remembering where we put our darned carkeys? >>



Well, the original chart posted is gone (guess it doesn't support the argument anymore?) and it's been more than a few months since re-posting, but here's an update:

Latest Dow:Gold ratio 12.51 and rising >>



It actually does support my original argument (just look at the last cycle on the chart - see a similarity?).

cohodk

I posted this chart at the beginning of the year when the ratio fell back into the channel. Funny how these channels attract price. Anyway, it shows that investors in the DOW and in GOLD have the same exact returns since 2008. Magical properties? Blah. Just another asset class.

cohodk

ProofCollection, does this mean anything if the price cannot hold the 61.8% retracement level?

roadrunner

Looks like the gold/Dow chart is working on that 5th wave ending diagonal pattern. Who knows how look it could take to play out? Could meander down to 0.05-0.06 far into 2015.