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Hate to tell you, but the concept of a Gold/Dow ratio makes no sense for one reason: the "Dow" has ten times the earnings that it did twenty or twenty-five years ago, but an ounce of gold then is still just an ounce of gold now. One who buys gold for the long haul is like the biblical servant that merely held the gold talent instead of investing it...at the end, the gold talent was still just a gold talent.
I'm just sayin'.
What are the earnings measured in? I rest my case.
What are the earnings measured in? I rest my case.
You have no case. Dow earnings and the price of gold are both measured in dollars. In January 1980 you could have purchased an ounce of gold in the $800 range or the Dow in the 800's. Today the Dow's earnings are many times higher than in 1980, and you would have 14 times the money. An ounce of gold is still just an ounce of gold, and the dollar price is about twice what it was in 1980.
14 times the money is better than 2 times the money, just figuring. This does not count the generally rising stream of dividends, year by year, on the Dow.
You have no case. Dow earnings and the price of gold are both measured in dollars. In January 1980 you could have purchased an ounce of gold in the $800 range or the Dow in the 800's. Today the Dow's earnings are many times higher than in 1980, and you would have 14 times the money. An ounce of gold is still just an ounce of gold, and the dollar price is about twice what it was in 1980.
14 times the money is better than 2 times the money, just figuring. This does not count the generally rising stream of dividends, year by year, on the Dow.
Ah yes, the "what if you bought gold in 1980" argument. Gold was worth the Dow twice before, but somehow you say this time it's different? Get real.
Makes sense - if the "dollar bill" drops in value by 300%.
Speculators can only "make money" by selling worthless paper back and forth, while the sheeple try to get in on the game.
There is still going to be tremendous volatility on Wall Street. The doomsday reports of financial collapse have eased off for a few weeks, so people have regrouped on equities.
Yet when consumer confidence report is down such as today, all it will take is a default in Europe or a big bank to tank overseas and the bailers will start ditching their stock holdings.
What would keep the markets reassured is if congress starts doing its job, and starts a constructive dialogue on debt reduction, and actually convinces the nation and the world that it actually can accomplish something.
I think a significant part of the anxiety in the markets recently has been created by incompetence of both parties in congress----the slogans, the idealogical dribble, and the lack of leadership and creativity has frightened the markets. If this total void in congress continues confidence may sag again.
Ah yes, the "what if you bought gold in 1980" argument. Gold was worth the Dow twice before, but somehow you say this time it's different? Get real.
Summers73, a LOT of people bought gold at the 1979-80 peak, just as a lot of newbies have piled in near today's high prices. Nobody wanted it at $290 an ounce in 1993.
I'll type this very slowly, please try to follow: while the intrinsic value of an ounce of gold is still just an ounce of gold, the underlying basis for the value of the Dow (earnings) has doubled and doubled and doubled. When the Dow hits 20,000 at some unknown point in the future, gold is highly likely to be 1/10th or 1/20th of the Dow. Decades from now, gold could be 1/50th or 1/100th of the Dow. Gold is static; the Dow is a growth machine.
Near term, the price of gold will be unpredictable as it is entirely dependent on fads, fashion, the madness of crowds. When the bubble pops, as it inevitably will, there will be a lot of pain.
I know you will not agree with my opinion; I understand that you hold your opinion firmly. That's why they have a market. Good luck.
The stock market is extremely overvalued. It's ridiculous. It keeps going up and up and the economy hasn't even improved.
Because it's a scam perpetrated to make it LOOK like things are getting better, but they are not. It is printed money infused into the markets to instill a level of confidence in the public so they dump their money in just so the elites can pull the rug out from under them. It has been going on ever since the crash. It's part of Obama's wealth spreading plan. Remember, Obama is rewarding these crooks every chance he gets.
Summers73, a LOT of people bought gold at the 1979-80 peak, just as a lot of newbies have piled in near today's high prices. Nobody wanted it at $290 an ounce in 1993.
I'll type this very slowly, please try to follow: while the intrinsic value of an ounce of gold is still just an ounce of gold, the underlying basis for the value of the Dow (earnings) has doubled and doubled and doubled. When the Dow hits 20,000 at some unknown point in the future, gold is highly likely to be 1/10th or 1/20th of the Dow. Decades from now, gold could be 1/50th or 1/100th of the Dow. Gold is static; the Dow is a growth machine.
Near term, the price of gold will be unpredictable as it is entirely dependent on fads, fashion, the madness of crowds. When the bubble pops, as it inevitably will, there will be a lot of pain.
I know you will not agree with my opinion; I understand that you hold your opinion firmly. That's why they have a market. Good luck.
Few thought 6 ounces of gold would buy the Dow back in 2005. Too many people were gaga over homes to pay any attention, probably also talking as yourself about the earnings of Beazer and Toll Brothers as proof of my fallacy. I'm sure just as many (yourself included) believe the PRESENT (keyword here) earnings of the Dow will be sufficient to maintain a 6-1 ratio or higher. I doubt it. Come back to this thread in a year and let's see where that ratio lies.
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