DOW to Gold Ratio breaks below 8.0 again

Dear PGM Capital, Blog readers,
Today, July 26 2011, Gold closed on a new all time high of US$ 1,619.90 an oz, while the DOW was down and closed at 12,501.30.

The latter is the value of the DOW measured in USD, in paper money. However when we measure the value of the DOW in Gold, (real money) the DOW was worth today 7.7 ounces of Gold.

We’ve obtained this number by calculating the DOW to Gold ratio for today, by dividing today’s closing value of the DOW, by today’s closing value of Gold.

As can be seen from below chart we are currently in a down trend for the Gold to Dow ratio after this ratio peaked at 43.7 in June of 1999.

Given that the trend is your friend until it is not, then the Dow:Gold chart is a guide to serious investors about where to put your money for the next few years. Of course, this is a long-term trend, so a short-term setback for the gold price can still happen as the Dow first sinks.

Currently our personal financial asset portfolio is over 50% invested in precious metals, like Gold, Silver, Platinum and Palladium  

Last but not least, please consider before investing your risk tolerance and investment horizon and keep in mind that the prices of Gold, Silver and other precious metals, as well as the stock of their producers can be very volatile and that sharp correction might happen in the short time.

Yours sincerely

Eric Panneflek


Leave a Reply

Your email address will not be published. Required fields are marked *