Friday, January 29, 2010

A stock Market Rally ? Not...

Many investors have been fooled by the stock market "rally" of the past ten months. In dollar terms, it certainly does look like a rally, with the Dow anemically recovering and trading around 29% below its all-time record. However, when measured in the ultimate currency of value, gold, we have a much bleaker picture.

Illustrating this point, the chart below (courtesy of presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold.

It currently takes 9.3 ounces of gold to “buy the Dow.” This is considerably less that the 44.8 ounces back in the year 1999. When priced in gold, the US stock market has been in a bear market for the entire 21st century!. Nothing better illustrates The Great Greenspan Depression of the Millennium. And, if the numb nuts in Washington continue to have their way, the massive hyper inflation that is in store for us in order to pay for those bailouts and pork will indeed be of epic proportions.

At least, in dollar terms, Real Estate will surely recover... How about $10 million for a trailer, or a couple billion for a waterfront home?


  1. We shall see. Gold is an interesting asset, but I don't know if I would be comparing all asset classes to gold. Nice chart though.

  2. Great post regarding real estate, thanks

  3. I appreciate this awesome real estate blog. Thnks



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