Dow to gold ratio

Discussion in 'Economics' started by peilthetraveler, May 4, 2010.

  1. I rounded the numbers YTD for May back to 2001 and here is what I get for Dow/gold ratios.(How many ounces of gold to buy the dow. I rounded down on the oz ratio and even numbers on the dow & gold so there is a slight variance in the final #s (because im that lazy)

    May 2001 10,900 $270 40 oz
    May 2002 9700 $310 31 oz
    May 2003 8500 $350 24 oz
    May 2004 10000 $380 26 oz
    May 2005 10400 $420 24 oz
    May 2006 11000 $680 16 oz
    May 2007 13000 $665 19 oz
    May 2008 12500 $880 14 oz
    May 2009 8500 $920 9 oz
    Today 10926 $1168 9 oz

    Now as you can see there are alot of swing downs in the gold/dow ratio of 20% or more some years and some years it stays the same or close and then moves big. If we continue down this road, its logical to assume that this time next year if we see the dow at 13,000 gold will surely be about $1,800. If the Dow drops to 9,000 gold will go to $1,250(this is all speculation based on a 20% move in the gold/dow ratio.)

    Ah...remember a few years ago when we said $600 gold was expensive? 3 years from now, we will say $1,200 gold was cheap.
  2. In 1980 and the early 1930's, the ratio may have gotten near parity, i.e. 1 ounce. Each market can still move a long way in order to bring "that" about again. :eek: :( :eek:
  3. moarla


    the ratio gets always to 1:1 at some point, go back an check...

    the question is 3000 : 3000 or 12.000 : 12.000 or 30.000 : 30.000
  4. You're not being bearish enough........Dow Jones at "1" and gold at $1 per ounce. :eek: :D :( :mad:
  5. haha. If that happened, a new car would likely cost $25. Anyone that held say $1,000 in cash would be the equivilent of a millionaire today. :)
  6. Maybe the ratio of the price of a Chevrolet to the gold price has predictive "value". :confused: :cool:
  7. Wouldnt going back to the last big swing in the late 80s or using a linear avg for both make for better analysis? I mean, you chose the very bottom that preceded this decade long rally to get your figures.

    Good thread though!
  8. good work peil. i think it gives a good indication of where it is going.
  9. Looks like that ratio went even lower today. Now we are down to about an 8.7 to 1 gold to dow ratio (from a low of 8.29 to 1)
  10. lrm21


    #10     May 6, 2010