muses of the moment

May 21, 2010

Gold/DOW ratio

Click here  for an updated Gold/Dow ratio chart from chartoftheday.com.

As you can see, it is continuing to fall in the current channel trend. This is the chart to watch, not the price of gold or the price of the DOW. In a hyperinflationary situation, this ratio will be the same (although probably lower), while the price in USDollars for the DOW and gold could be 4 or 5xs its current price. This chart tells you which is the better investment for a long-term business cycle. That would be gold, not stocks, since 2001.

If you want to get really creative, you could price gold and DOW after taxes (28% and 15% at the moment) and see the ratio then. The lower the ratio, the less large taxes on gold will not matter. It will still be a better investment (depending on your individual financial situation).

Here is another excellent post by smartknowledgeu that has 10 charts of gold vs. any investment. Gold has been the best investment over every global index expect India in the last 10 years. Very enlightening, but groovygirl wonders why you have not heard this info or seen these charts on F-TV? Ummm.

Answer: because the big investment houses (GS) can’t collect fees on gold expect through one or two ETFs. They make money by shorting the gold market and fleecing those ignorant enough to sell their gold in a panic.

Please buy and hold some physical gold, or silver, if you have not already. Even with the gold manipulation going on, it has still outperformed almost all markets. The economic environment that has driven this gold market for the past 10 years is still here. In fact, it is worse and continuing to get worse. There is no fundamental reason NOT to have some gold (or silver). In groovy girl’s humble opinion, it is dangerous not to.

From Jesse at his Cafe Americain, he says we have a possible tea-cup formation in the gold price. That means gold price down to $1150 is still OK. Don’t panic. We will see if he is correct. Click here. (Groovygirl posts these short-term price possibilities so that you can buy on dips for long-term holding, not trade.)

Side musing: we have another major liquidity crisis going on that the media/government is not talking about. A run on money markets from the European crisis. Click here.

Side-side musing: important information on Wikileaks founder. Click here.

Update: they totally gunned the DOW 150 points in the last 15 minutes. They are so much more obvious now….and, I guess, desparate. Anyone can observe the clear manipulation of these markets.

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