Thursday, October 09, 2008

A Long Way to Go

Have you ever heard of the Dow/Gold Ratio? You should definitely get acquainted with it. Visit this site and look at the long term chart, and let it sink in.

You will notice that economic downturns never reverse until the Dow/Gold ratio is around 2 or less.

Right now, this second, the DGR stands at 9.4. (DJIA from CNNMoney and Gold Price from goldprice.com)

We have a long way to go people. A DGR around 2 or less indicates a market that has cleaned out excesses. It is very possible the bottom will look like either Gold-2.5k/Dow-5k or Gold-1.5k/Dow-3k before this is over. Enough government intervention and we could see Gold-3k/Dow-3k, perhaps.

Hold on tight and pray!

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