ONE OUNCE OF GOLD WILL AGAIN BUY THE DOW!
June 10, 2015
For today, those in control will not allow the gold price to reach $18,000 an ounce where the 18,000 DOW sits today, but the DOW could drop 90%, as it did in 1929, to 1800 and gold rise to $1,800 an ounce! Could one accept the very real possibility that the DOW will unhinge by 50% and gold rise to $9,000 an ounce? Look at these historical DOW to GOLD ratios. There appears to be a ratio pattern of DOW to GOLD of 1:1, 1:2, 1:1, then perhaps the next ratio could be 1:2 whereby the DOW would be bought by two ounces of gold. If one ignores the 1897 start of the DOW data, the ratio pattern may be descending from 1:2, 1:1 to 1:0.5 or a half ounce of gold would buy the Dow. One might even accept that the average of these ratios 1:1.3 could be a future price for gold as well. Either way, are you going to wait and discover what gold's new value will be when the market stumbles to 9,000 and gold reverses to a new bull market?
1897 1:1 - Start of the DOW & record keeping
1929 1:18 5yr Before the stock market crash
1932 1:2 - Great Depression begins after the market crashes
1966 1:28 48yr U.S. credit crisis creates deflation & economic slump
1979 1:1 - Global economic credit crisis creates recession
1987 1:4 - Bond & equity market crashes
1998 1:35 - Lng.Trm.Crdt.Mgmt. destroys global financial economy
1999 1:44 35yr Dot.com explosion/Nasdaq crash
2006 1:19 - Real estate derivative crash
2011 1:6 - World Q.E. life jacket buoys world financial system
2015 1:15 - Media reports global economy has recovered
20?? 1:2 - World financial system ENDS w Greatest Depression
The other possibility, what if the DOW doesn't fall as it did in 1929 but rises as it did during the recessions of the 60's and 70's, and the gold price rises to $18,000 to meets the market!
What if stock prices begin to decline in September and by mid month October panic sets in? Leading bankers attempt to stabilize the markets by buying up great blocks of stock, producing a moderate rally before giving up as markets go into a free fall wiping out trillions of dollars and hundreds of thousands of investors. One would think the markets next could only go up, from the unthinkable, however prices continue to drop as the world's markets plummet mankind into the Greatest Depression of the world. Nearly half of America's banks fail while worldwide that number is closer to 90% and unemployment in the U.S. is estimated at 30% or 108 million people while worldwide numbers are far worse. What happens on your main street when the whole house of cards finally collapses?
Worst case scenario would be the DOW crashing and losing 90% of its value landing at 1,800 and the DOW/GOLD ratio prices for gold at 1:0.5 would reset to $3,600, at 1:1 $1,800, 1:1.3 $1,200 and at 1:2 $900.
More realistic would see the DOW dropping in half settling at 9,000 and the DOW/GOLD ratio prices for gold at 1:0.05 would be $18,000, at 1:1 $9,000, at 1:1.3 $6,000 and at 1:2 $4,500.
But what if the DOW stays at 18,000 points and the DOW/GOLD ratio for gold rockets to 1:0.05 $36,000, at 1:1 $18,000, at 1:1.3 $12,000 and at 1:2 is $9,000.
Most investors laugh that the Dow Jones is unlikely to lose 90% of its value and replicate the 1929 crash, as this was largely affected by WWl debt. Consider though, that today, the fact that WWl debt is but a drop in the bucket compared to the debt accumulated by our government. Whatever DOW/GOLD ratio you choose, gold prices should be significantly higher over the coming years from $900 to $36,000! Are you willing to bet that nothing is going to happen?
Let me recommend to you, as the market continues to stay buoyed, that you take at the least 30-40% of your money off the equity market table! GO ON VACATION IN JUNE AND COME BACK TO THE MARKET WHEN AND IF EQUITIES EXPERIENCE THE CORRECTION IN THE FALL. A five year old reading these charts could see a correction coming! Hold some cash and buy real assets of gold and silver! Next, place close stops at 25-30% off your stocks current value as insurance, so you won't get hurt too bad when the market abruptly reverses. Look at some energy sector stocks or miners that are some 50-90% down and value priced and potentially set to double in the coming years. Protect your family before it's too late!
There appears to be a ratio pattern of DOW to GOLD of 1:1, 1:2, 1:1, then perhaps the next ratio could be 1:2 whereby the DOW would be bought by two ounces of gold. If one ignores the 1897 start of the DOW data, the ratio pattern may be descending from 1:2, 1:1 to 1:0.5 or a half ounce of gold would buy the Dow. One might even accept that the average of these ratios 1:1.3 could be a future price for gold as well. Either way, are you going to wait and discover what gold's new value will be when the market stumbles to 9,000 and gold reverses to a new bull market?
Spot prices accurate as of
Fri Oct 15 21:00:51 PST