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XMFSinchiruna (27.70)

Updated Dow Gold Ratio

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31

May 14, 2010 – Comments (7)

Note how the entire nominal Dow rally is actually no rally at all when expressed in terms of the ultimate barometer currency.

Today's new all-time nominal high price for gold at $1,250 coincides with an incredible 85.78 on the USDX.

Imgine, for a moment, what will happen to gold prices when the Euro once again ceases to outpace the USD in its pace of devaluation. Recall that although Europe's economic challenges are every bit as major as our own, their degree of currency impairment from a public indebtedness standpoint and from an induced-liquidity standpoint is nowhere near as severe as our own. The majority of the $600 trillion derivatives market is priced in USD, and so represents a massive counterparty risk on every greenback.

Imagine what will happen to gold prices when the USDX reverts back merely to the prior low-point in the lower 70s. The next time USDX hits 72, gold will be likely to have surpassed Jim Sinclair's long-held target price of $1,650 per ounce.

All talk of the USD as a safe haven will eventually cease. It's just a matter of time.

Thanks to JSMineset's Dan Norcini for this telling chart.

7 Comments – Post Your Own

#1) On May 14, 2010 at 9:57 AM, XMFSinchiruna (27.70) wrote:

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#2) On May 14, 2010 at 10:04 AM, outoffocus (22.80) wrote:

Could you post a link? I still can't see the chart.

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#3) On May 14, 2010 at 10:07 AM, XMFSinchiruna (27.70) wrote:

that's strange .... it was there a second ago.  :)

http://jsmineset.com/

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#4) On May 14, 2010 at 10:13 AM, outoffocus (22.80) wrote:

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#5) On May 14, 2010 at 10:14 AM, outoffocus (22.80) wrote:

http://jsmineset.com/wp-content/uploads/2010/05/Dow-Jones-Gold-ratio.pdf

 

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#6) On May 14, 2010 at 10:18 AM, binve (< 20) wrote:

Hey Sinchi, thanks man! Also, I just put up a new post with a big thanks :) -- http://caps.fool.com/Blogs/ViewPost.aspx?bpid=391654 . Thanks man!

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#7) On May 20, 2010 at 4:57 PM, rjm5x2 (< 20) wrote:

Hey guys, great stuff! I made an iPhone app that calculates the Dow to Gold realtime. Check it out!  www.dowingold.com

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