Dow Gold Ratio

[GoldNugget]

Mark Faber talks about a number of factors that suggest a correction in the US Stock Market is near and provides some excellent charts to demonstrate why.

Faber says "Wherever, you may think the Dow will rise or decline my view is that we shall, eventually, be able to buy one Dow Jones Industrial Average with between just one and five ounces of gold".

See the chart below of the Dow Gold Ratio.

Correction Time is Here! by Marc Faber

As to the catalyst that will trigger the correction, I suppose that inflationary pressures may necessitate more additional interest rate increases than the market now expects. Therefore, rising interest rates and declining bond prices could at some point weight on all asset markets. But it does not really matter what the catalyst will be. When all asset markets are as extended as they are now it does not take much for a vicious sell-off to get underway. Still, I maintain that gold and other precious metals will continue to out-perform financial assets. Wherever, you may think the Dow will rise or decline my view is that we shall, eventually, be able to buy one Dow Jones Industrial Average with between just one and five ounces of gold (see figure 5).

Figure 5: Dow/Gold Ratio, 1900 - 2005

Source: www.sharelynx.com

[delkulara]

eventually, be able to buy one Dow Jones Industrial Average with between just one and five ounces of gold

I prefer to keep my gold in the form of gold