Don't Miss Out On Great Gains! - Best Investment Newsletter

Click for FREE sample of Kirk Lindstrom's Investment Letter

Don't miss out! Subscribe Now

Search For More

Friday, September 11, 2009

DOW Gold Ratio at 9.66

The Dow Jones Industrial Average measured in how many ounces of gold it takes to buy the 30 stock DOW is up 37% from its 17-year March 6th low of 7.03. (Gold quote and charts) Despite that impressive gain, the DOW-Gold ratio remains 78% below its 1999 peak of 44.77.

Here is a chart showing the current Dow to Gold Ratio, the ratio of the price of the Dow Jones Industrial Average to the price of gold. When measured in ounces of Gold, the DOW has been in a secular bear market since peaking in late 1999.

Click chart courtesy of for full size image

The markets, measured by the S&P500 (S&P500 Charts) and DIJA (DJIA Charts), may have recovered to new highs in 2007, but the DOW:Gold ratio told a different, truer story of just how unhealthy the US economy was.
  • Back in 1999, it took 45 ounces of gold to buy the DJIA.

  • On Friday March 6 of 2009 the DOW-Gold ratio hit a low of 7.03

  • As of Friday (September 11, 2009) it only took 9.66 ounces of gold to buy the DOW

  • Gold quote and charts
The scary part is the DJIA-to-Gold ratio got down near 1 in the early 1980s and was just under 0.2 in the early 1800s.

Which way do you think the DOW-Gold ratio is headed?

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 144% (a double plus another 44% !) vs. the S&P500 UP at tiny 2.5% vs. NASDAQ down 3.2% (All through 9/30/09)

This 200 Year Dow/Gold Chart shows the DOW/Gold ratio from 1800 through August 2008.
chart courtesy of (Click for full size image)

With the DOW:Gold ratio now at 9.66, it is trading below the green zone in the second chart. The ratio is oversold, but nothing says it can't get more "oversold."

CDs have been a "safe haven" for those wishing to preserve assets and get a small inflation adjusted return. See "Very Best CD Rates with FDIC" for a list of the best rates and terms.

US Treasury rates are so low, that they are paying less than long term inflation. See:
As of September 30, 2009, "Kirk's Newsletter Explore Portfolio" is up 25.8% YTD vs. DJIA up 10.7% YTD

Subscribe NOW and get the September 2009 Issue for FREE! !
(Your 1 year, 12 issue subscription will start with next month's issue.)

1 comment:

  1. I think the DJIA:Gold ratio will reach 1:1, but my question is this: What is the significance of this in the real world? What does this translate into for the average person or for the country as a whole? Thanks for your help. - Dusty


Followers - Click "follow" to get an email alert for new articles

Kirk Lindstrom's Investment Letter Performance