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Update on the Dow/Gold Ratio and a few more Gold Ratios

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May 07, 2010 – Comments (9)

Here is an update on my Dow/Gold Ratio chart. The original post, with a *very* detailed explanation of what the DGR means, and what my projections are for both Gold and the Dow can be found here: The Dow / Gold Ratio



ENLARGE



ENLARGE

Here are some other key Gold Ratios and the historical and relative performance. I had said that I would write a dedicated post about these someday, but I didn't. The chart is pretty self-explanatory though.



ENLARGE

9 Comments – Post Your Own

#1) On May 07, 2010 at 7:05 PM, XMFSinchiruna (27.20) wrote:

IMHO, 1:1, if we reach it, would most likely occur in the neighborhood of $3,000 to $5,000. I'm retaining a more conservative interim target of 2:1 in the neighborhood of 5,000 Dow to $2,500 gold. If that pans out, I may begin GRADUALLY reducing my precious metals exposure starting around $2,500 gold and moving into the cheapest stocks with staying power that I can find at the time. I will most likely retain some substantial exposure to target $3,500 and higher and $100+ silver, but some portion of my 90% precious metals allocation will start coming off the table soonafter the $2,000 milestone.

Great post, and terrific charts as always binve!!

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#2) On May 07, 2010 at 7:17 PM, binve (< 20) wrote:

TMFSinchiruna,

Hey man!

>>IMHO, 1:1, if we reach it, would most likely occur in the neighborhood of $3,000 to $5,000. I'm retaining a more conservative interim target of 2:1 in the neighborhood of 5,000 Dow to $2,500 gold. If that pans out, I may begin GRADUALLY reducing my precious metals exposure starting around $2,500 gold and moving into the cheapest stocks with staying power that I can find at the time. I will most likely retain some substantial exposure to target $3,500 and higher and $100+ silver, but some portion of my 90% precious metals allocation will start coming off the table soonafter the $2,000 milestone.

I very much like your projections. I am in agreement. I do think the crisis peak will be more than 2:1, but I agree with you that a 2:1 ratio represents a very nice risk/reward profile to start getting into quality equities. I will be begin looking strongly and good divided yielders once we get to those levels. I also agree. I see a target of ~4000 for the Dow when this crisis has run its course.

>>Great post, and terrific charts as always binve!!

Thanks my man!!..

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#3) On May 07, 2010 at 7:25 PM, binve (< 20) wrote:

clarification

>>I do think the crisis peak will be more than 2:1,

By that, I mean I see the DGR at 1:1 or maybe even 0.5:1 at the very height of the move. I bet that will be when either the Gold is moving up *very* fast (or the Dow is dropping *very* fast), so capturing that peak will be difficult at best. So I too like 2:1 as an entry point.

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#4) On May 08, 2010 at 4:12 AM, ralphmachio (29.37) wrote:

So I have to rethink the gold thing, after looking at those charts. Silver will be a better investment after gold takes off  (probably), but will physical silver be readily available at the premium slingshot opportunity? Or, will I be able to conveniently trade my gold for silver after gold does it's thing? 

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#5) On May 08, 2010 at 10:30 AM, kdakota630 (29.83) wrote:

Excellent blog (the link you provided), binve. 

I just skimmed it for now and will look a little closer shortly, but it was fantastic from what I could tell perusing it for 5 minutes or so.  Also, thanks for the shout-out, although clicking your link didn't take me where I wanted to go.  I had to copy and paste it.

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#6) On May 08, 2010 at 11:33 AM, binve (< 20) wrote:

ralphmachio ,

Those are *very* good question. Myself, ChrisGraley, and TMFSinchiruna explored that topic in this post http://caps.fool.com/Blogs/ViewPost.aspx?bpid=316831. In particular, silver is not warehoused at all like gold and if there is a pickup (even small) in legitamite investment demand and people want physical delivery (don't buy SLV, it is a POS), I doubt it will be available. There are a lot of facets to that question with no clear answers :(

kdakota630,

Thanks kdakota!!

>>Also, thanks for the shout-out, although clicking your link didn't take me where I wanted to go.  I had to copy and paste it.

Doh! I just remedied that error. Sorry :). Thanks man!..

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#7) On May 08, 2010 at 3:19 PM, uclayoda87 (29.45) wrote:

  binve

 I just posted a blog concerning colombia1's old Fractals!! blog, which I think fits in well with where you are heading with your post.

 

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#8) On May 08, 2010 at 3:35 PM, binve (< 20) wrote:

uclayoda87,

Hey uclayoda! Thanks. Yes, I am good friends with Col and commented on his Caps "Fractals" blog and the original one he wrote on his other blog: http://ewtrendsandcharts.blogspot.com/2009/10/fractals.html.

Col and I are of a similar mindset. We are both very bearish on the economy and we both have similar long term projections. Here is my long term projection (in it I have P3 starting in July, but I think based on the last week that there is a strong possibility it started now): Reviewing the Larger Count

Thanks man!..

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#9) On May 08, 2010 at 5:06 PM, binve (< 20) wrote:

uclayoda87, I just wrote a new post that I think you would be interested in: http://marketthoughtsandanalysis.blogspot.com/2010/05/larger-count-with-p2-placement-that-i.html..

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