Dow Jones lowest point in 2 years, ten years or even more?

[fatjohn]

Msnbc had an article where they just stated that the dow jones had the lowest value since two years today. Off course that's in US dollars. If you put that in Euro's you have to go back to 98-99. That's right even terrorists couldn't put the economy in such a chaos like today, but appearantly nobody really notices. If you take gold it's probably around 95 to get the 12,5 ratio of today. That is if you forget about the peak of gold in march. I don't really have hard numbers here, but hey the evidence is out there if you want the exact dates be my guest i think i won't be far off, judging on some graphs and numbers i just played with. For me I think the Dow vs Gold comparison is very valuable. In the past it showed that gold always goes back to a value of less then 5 ounces for a DJIA. But since i more and more think that the Dow isn't a good indicator of the world economy because the US plays less and less a role in it. (Still the biggest of course but smaller then in the sixties for example) I'm wondering if somebody knows what's a very good indicator to have a gold ratio with. Where you can see quit the same patterns like you can in the Gold vs Dow graphs.

 

[Paulitician]

The Dow Is Crashing!

It's a year old article but still relevant (just not totally up to date). So yeah, lowest it's been in 2 and 10 years, and probably a little more.

 

[acptulsa]

It seems to me the NASDAQ would be superior to the Dow Jones for that, but it still isn't terribly diversified. An S & P or similar fund might be a better one to watch. But, yes, most of the indexes are geography specific.

The gold comparison is a good one. Certainly figuring out how many pennies the dollar was worth in a specific year gives me a headache!

 

[Zippyjuan]

From 1966 to 1986 the Dow basically went nowhere. It moved up and down but stayed within a range the entire 20 years. We could be entering a similar period.
http://stockcharts.com/charts/historical/djia1900.html

 

[fatjohn]

Yes indeed Zippyjuan but that's also explained in paulitician's article. Which is very good btw.

 

[Johnnybags]

Inflation adjusted its down

probably 50 percent. 120 dollar IBM when the chimp took office is still 120 IBM? Whats it buy, 30 to 50 percent less. Silver up 400 percent or more since the chimp took office, whats it buy, oh way more. Washington is systematically stealing your standard of living. Ask to be paid in Euros or better yet Yuan.

 

[scooter]

All this thread has shown is that we're currently in a bear market for equities and a bull market for commodities. That doesn't mean it will last forever.

 

[scholarpreneur]

All this thread has shown is that we're currently in a bear market for equities and a bull market for commodities. That doesn't mean it will last forever.

No it shows that the Dow has lost value in relation to everything besides the fiat dollar.

 

[Dr.3D]

No it shows that the Dow has lost value in relation to everything besides the fiat dollar.

+1
And of course nothing lasts forever.

 

[Paulitician]

+1
And of course nothing lasts forever.

Sometimes scooter just likes to point out the obvious...

 

[scooter]

Sometimes scooter just likes to point out the obvious...

Actually, mainly I just get annoyed at all the gold discussion that mentions only the last few years and ignores the fact that for decades before that gold was a terrible investment.

I think I'm done replying to these types of threads however. The point is usually lost anyway because it seems people actually WANT doom and gloom and so they cheerlead as the DOW goes through troubles.

It's time to learn, folks, that there is always a bull market somewhere. The last few years have been commodities, while everything else has been in bear territory. Before that housing was in bull mode, while oil lagged.

The point is that the absolute worst thing you can do is chase a bull market. Buy when a good asset class is cheap, not after it has gone through a historical run. And the absolute dumbest thing you could do would be to run away from the stock market just because it has had a difficult couple of years. A diverse portfolio of stocks has been absolutely the ONLY way to beat inflation in the long run.

Oh well... have your gold. Come talk about purchasing power in about 20 years when it is still just a shiny metal with no productive use.

 

[Paulitician]

Actually, mainly I just get annoyed at all the gold discussion that mentions only the last few years and ignores the fact that for decades before that gold was a terrible investment.

Why should we care about what it did for decades before now? As you said, "that doesn't mean the [bear market would have lasted] forever."

It's time to learn, folks, that there is always a bull market somewhere.

Oh well... have your gold. Come talk about purchasing power in about 20 years when it is still just a shiny metal with no productive use.

Who says we're going to stick with gold forever?

 

[fatjohn]

Oh well... have your gold. Come talk about purchasing power in about 20 years when it is still just a shiny metal with no productive use.

I won't i'll probably sell it when 2 ounces of gold give you 1 dow jones. Peter shiff even said it would go 1 to 1. Still have time to think about that but it won't take 20 years. But indeed people said here that it is beter to look at the S&P/ gold ratio instead of the dow/gold ratio. But i'll try to work something out that also takes the Japanese, chinese and european markets into account. Already did that actually but set the values of the stock markets equal to the gdp of the country in 2007 but if you then worked it out then you could see that the japanese index had twice as much effect on the graph in 1990 then the Dow. So it didn't really showed a plausible trend of the world economy in the value of gold.

 

[Paulitician]

I won't i'll probably sell it when 2 ounces of gold give you 1 dow jones. Peter shiff even said it would go 1 to 1. Still have time to think about that but it won't take 20 years. But indeed people said here that it is beter to look at the S&P/ gold ratio instead of the dow/gold ratio. But i'll try to work something out that also takes the Japanese, chinese and european markets into account. Already did that actually but set the values of the stock markets equal to the gdp of the country in 2007 but if you then worked it out then you could see that the japanese index had twice as much effect on the graph in 1990 then the Dow. So it didn't really showed a plausible trend of the world economy in the value of gold.

You wanted to know a good gold/dow ratio... many experts do think gold and the dow will be at a 1 to 1 ratio sometime, but I have also heard doubts about that. Peter Schiff mentioned I think a week ago that there is no guarantee it will happen (nothing is guaranteed). I think people like James Turk have also said there might be situations where it doesn't happen because of manipulations, events in the market etc. that prevent it from happening. So to sell at a 2 to 1 gold vs. dow ratio is not that bad of an idea. You might think of starting to loosen up on your gold positions at that time, to where eventually you get rid of it all. There is no reason to want to sell it all at one time and try to time the top. But we don't know the circumstances of a 2 to 1 or 1 to 1 ratio, so we can't really asses the situation and say "this is probably a good time to sell." We'll have to wait till we're there. As for a gold/s&p ratio, I'm sure I've heard about it in passing but I can't remember much. Just read up on sites that do gold fundamental and technical analysis. A lot of people that are interviewed on shows that I put in my signature are good to follow. Check out the experts at Financial Sense, The Korelin Economics Report, HoweStreet (GoldRadio.fm), Commodity Watch, and GoldSeek.

 

[forsmant]

Well if everyone is expecting a 1 to 1 ratio, who is going to buy at that price?

 

[OptionsTrader]

Well if everyone is expecting a 1 to 1 ratio, who is going to buy at that price?

Sovereign wealth funds in other countries, and we will have officially been evicted from the rental property that is the US.

 

[forsmant]

Here is a chart from March on the Dow/gold ratio.

http://www.insidegold.com/article/32714/

 

[forsmant]

Here is an interesting chart of the Shanghai index:

 

[fatjohn]

Here is an interesting chart of the Shanghai index:

i cant see it!