In nominal terms the Dow Jones has gained close to 30.5% for the last six year period. What US investors don't consider though is those dollars "gained" in the stock market have lost 28% in purchasing power over that same period. A "blue chip" stock investor's net gain a feeble 3%, without taxes, of course. Face the music, stocks are for losers. Don't wait for CNBC to tell you this. Ahhh, yes, that yellow line is gold. But, you peeked!
We've still got a long way to go until we can buy the DJI for five gold ounces. Where just six years ago it would have taken 44 ounces to do so, the DJI is now cheaper at about 18.5 ounces. Not bad. Stocks have gotten more than twice as cheap for us gold bugs - even with the Dow showing a +30% gain. What will the Dow have to go to for us to realize a 5-to-1 ratio, and how long to get there? Well, let's see. Several respected analysts expect a DJ/Gold crossover where we'll see a 1-to-1 Ratio. As we pointed out a couple of days ago, just for gold to reflect an inflationary catch-up from $707 in 1980 we'd have to see a gold price of $1,964 - today. The dollar and stocks will go as low as investors will let them, or gold as high as long as people keep preferring it to paper alternatives.
Do your own math, your projection is as good as mine - or anyone else's.
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