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Tuesday, January 4, 2011

Dow vs. Gold: The Second Decade of Decline

The ratio of the Dow Jones Industrial Average to an ounce of gold has been falling for over a decade now, from a high of around 44:1 in late 1999.  The decline really got going exactly ten years ago.  The ratio  currently stands at 8.25:1.  Our target is simply a rough estimation of a cycling back to the early eighties just before the massive stock market bull, when gold went crazy.  Sometimes these targets overshoot.  Will it be a slow decline from here?  Probably not - probably more like the 1997 - 1999 period on the upside.

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