Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Silent Stock Market Crash, Dow Continues Slide vs. Gold

Commodities / Gold and Silver 2010 Oct 05, 2010 - 03:15 PM GMT

By: Tarek_Saab

Commodities

Best Financial Markets Analysis ArticleRise in equities got ya bullish? Be cautious. Amidst the October push to 11,000, the Dow Jones Industrial Average has continued its calamitous descent against gold which began in 2001 and shows no signs of abating. The silent market crash is real, and the fall of this paper tiger is surreptitiously ferocious.


As I wrote earlier this year, gold is not an investment. Gold is money - real money (See: Aristotle). Today, the rise in the Dow is being shown for what it really is - a crash - by that golden bedrock of monetary stability.

In the past 10 years, gold has fallen in nominal value sharply at times. In 2008, it plummeted over 20% in six months. It may happen again. But the real statistic worth measuring is purchasing power.

Gold's real value is determined not in the price of a fiat currency, but as a ratio to other assets. The Dow/Gold ratio simply determines how many ounces of gold it takes to purchase one Dow Jones Industrial Index. Whether the economy suffers through deflation or hyperinflation, it's the purchasing power that matters.

Dow/Gold Ratio

I follow the Dow/Gold ratio closely as a measure of equity strength. It is worth noting that, in the two most difficult economic periods in the past one hundred years, the Dow/Gold Ratio approached 1. As of today it sits at 8.16.

July 1932 - Deflationary Depression
Dow 41.22, Gold $20.67
Ratio: 1.99

January 1980 - Inflation
Dow 872, Gold $850
Ratio: 1.03

Will the gold price catch the Dow to the upside as a result of hyperinflation, or will the Dow plummet towards the gold price in a deflationary vacuum? There are well-qualified arguments for each scenario. Regardless of direction, what we do know is that the ratio is narrowing - and fast!

'Til next time, that's my Saab Story.

By Tarek Saab

Website: trustedbullion.com E-mail: tarek@trustedbullion.com

Tarek Saab is an entrepreneur, speaker, and nationally syndicated author. He is the founder of Saab & Company Inc., which owned the online bullion business, Guardian Commodities, before it was acquired by Trusted Bullion in August 2010. An avid precious metals enthusiast, his column, Saab Stories, is published on this site and syndicated on many others.

Tarek rose to fame as a popular contestant on Season Five of The Apprentice with Donald Trump.  He has been prominently featured in such magazines as Us Weekly, TV Guide, People, Enigma, In Touch Weekly, The Dallas Business Journal, The Fort Worth Business Journal, Digital Gold Currency Magazine, The Mensa Bulletin and numerous other print and online publications.

© 2010 Copyright Tarek Saab - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in