Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20
China Recovered in Q2. Will the Red Dragon Sink Gold? - 23rd Jul 20
UK Covid19 MOT 6 Month Extensions Still Working Late July 2020? - 23rd Jul 20
How Did the Takeaway Apps Stocks Perform During the Lockdown? - 23rd Jul 20
US Stock Market Stalls Near A Double Peak - 23rd Jul 20
Parking at Lands End Car Park Cornwall - UK Holidays 2020 - 23rd Jul 20
Translating the Gold Index Signal into Gold Target - 23rd Jul 20
Weakness in commodity prices suggests a slowing economy - 23rd Jul 20
This Stock Market Stinks - But Not Why You May Think - 22nd Jul 20
Protracted G7 Economic Contraction – or Multiyear Global Depression - 22nd Jul 20
Gold and Oil: Be Aware of the "Spike" - 22nd Jul 20
US Online Casino Demographics: Who Plays Online For Money? - 22nd Jul 20
Machine Intelligence Quantum AI Stocks Mega-Trend Forecast 2020 to 2035! - 21st Jul 20
How to benefit from the big US Infrastructure push - 21st Jul 20
Gold and gold mining stocks are entering a strong seasonal phase - 21st Jul 20
Silver Eyes Key Breakout Levels as Inflation Heats Up - 21st Jul 20
Gold During Coronavirus Recession and Beyond - 21st Jul 20
US Election 2020: ‘A Major Bear Market of Political Decency’ - 21st Jul 20
Summertime Sizzle for Gold and Silver - 21st Jul 20
Overclockers UK Custom Built PC Review - Delivery and Unboxing (3) - 21st Jul 20
Will Coronavirus Vaccines Become a Bridge to Nowhere? - 20th Jul 20
Stock Market Time for Caution?  - 20th Jul 20
ClickTrades Review - The Importance of Dynamic Analysis and Educational Tools in Online Trading - 20th Jul 20
US Housing Market Collapse Second Phase Pending - 20th Jul 20
Capitalising on the AI Mega-trend - 20th Jul 20
Getting Started with Machine Learning - 20th Jul 20
Why Moores Law is NOT Dead! - 20th Jul 20
Help the Economy by Going Outside - 19th Jul 20
Stock Market Fantasy Finance: Follow the Money - 19th Jul 20
Did the Stock Market Bubble Just Pop? - 19th Jul 20
Quick Souring of the S&P 500 Stock Market Mood - 19th Jul 20
The Six-Year Jobs Recession - 19th Jul 20
Silver Demand Exploding! - 18th Jul 20
Tesco Scraps Covid Safe One Way Arrow Supermarket Shopping System - 18th Jul 20
The Rise of Online Pawnbroking - 17th Jul 20
Gold Rallies Together With U.S. Covid-19 Cases - 17th Jul 20
Gold & Silver Measured Moves - 17th Jul 20
The Bizarre Mathematics Of How Negative Interest Rates Create Stratospheric Profits - 17th Jul 20
From a Stocks Bull Market Far, Far Away, Virus Doomsday Scenerio! - 16th Jul 20
Fiscal Cliffs and the Self-destructing Treasury - 16th Jul 20
Dow Stock Market Crash Watch - Update - 16th Jul 20
Gold & Silver Gaining on US Dollar Weakness - 16th Jul 20
How to Find the Best Stocks to Invest In - 16th Jul 20
Overclockers UK Custom Build PC Review - 2. System Build Changes Communications - 16th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

10 For Gold Zero For The Dow

Commodities / Gold and Silver 2010 Apr 28, 2010 - 02:53 PM GMT

By: Hubert_Moolman

Commodities

Best Financial Markets Analysis ArticleIt seems that gold and the Dow have an agreement regarding the number 10. This number has acted like a “golden ratio” in that things really start to happen before or after the Dow/gold ratio breaches 10, either way.


gold_all_data_b_dow.png

chart generated on goldprice.org

10 out of 10 for Gold

In Jan 1973 the Dow peaked at 1067, a level it did not managed to surpass until after gold peaked in 1980. In that same year gold bottomed at about the $90 level just after it made a peak close to the $130 level in the same year. Also in 1973 (see chart above) the Dow/gold ratio managed to go below 10 for the first time since it peaked in the middle of the 60’s at about a ratio of 27. At the end of 1973 it retested the 10 level and from there zoomed down to bottom at about the 3.2 level the very next year. From that bottom in 1973 gold doubled in a matter of less than 6 months.

In 1976 the Dow/gold ratio was back to just under the 10 level, where in that same year gold bottomed just above $100. The Dow also peaked in 1976 at 1026. From that 1976 peak the Dow/gold ratio fell to where it bottomed just above 1 in 1980. Again, from that bottom in 1976 gold started a phenomenal rally that ended in 1980 with gold above $800.

The moral of the story is that the 10 level for the Dow/gold ratio was a pivot point (in 1973 & 1976) from where the gold price really took off.

10 out of 10 for the Dow

In 1995 the Dow/gold ratio broke the 10 level once again, however, this time going from under to over 10; from where it ran hard until it peaked at about 45. In that same year the Dow broke out of the 4000 level for the first time and starts a rally that doubled the Dow in less than 2.5 years and eventually taking it to above 11 000 in 1999. When you look at a Dow chart you will see that the steepness of the price chart changed significantly from the beginning of 1995. Gold was at the $400 level which was a high since about 1990. From 1995 gold was not able to surpass the $400 level until after the Dow peaked in 1999. In fact gold bottomed significantly lower at under $300 at about the same time that the Dow made its all time high.

The Dow/gold ratio also broke the 10 level in 1953, going up, and ran hard until the peak of 27 in the middle 60’s. Since breaching that 10 Dow/gold ratio level in 1953, the Dow ran hard until it peaked in 1966 at 1000, almost 4 times the 1953 level.

The moral of the story is that the 10 level for the Dow/gold ratio was a pivot point (in 1953 & 1995) from where the Dow really took off to new highs.

Who is taking the 10 this time?

At the beginning of 2009 the Dow/gold ratio managed to go below 10 for the first time since it peaked at 45 in 1999. In 2009 it went as low as 7 from where it has gone back to retest the 10 Level in August 2009 and almost again in February 2010 when gold bottomed.

So, it seems that we are again at a point where the Dow/gold ratio has broken through that critical 10 level, from higher to lower than 10, and has retested it in February 2010. This is a situation similar to 1973 as well as to 1976. In fact it is actually similar to 1930 as well, since the Dow/gold ratio also fell through the 10 level after peaking in 1929. The same happened in that it retested (came just short of) the 10 level in 1931 and from there it was off to the races, bottoming at just above 2 in 1932. Gold’s price increased significantly more since the 10 Dow/gold ratio was breached in 1931, since general price levels decreased in what was termed deflation (remember gold was money so a decrease in general price levels meant an increase in gold’s price).

With the Dow/gold ratio currently at about 9.42, is it going to run off to the 3, 2 and 1 level from here, in similar fashion as it did from  1931, 1973 as well as from 1976? Will the gold price increase in a spectacular manner as it did from 1931, 1973 and 1976?   I certainly think that it will. In fact my own fractal analysis suggests that it will. For more on what the above means for the future, as well as analysis of the gold and silver market you are welcome to check my blog or subscribe to my free newsletter (see below).

History Repeats + History Rhymes = Fractals

The above illustrates how history repeats itself, and therefore in some way how cycles are an inescapable part of life. Fractal analysis recognises that history repeats itself in a self-similar manner. That is that the past tend to repeat itself not in an exact manner but in a reliably similar manner.

If you would like to know more about my fractal analysis you can email me (see below), and I will send you a free report on fractal analysis which includes a short term fractal analysis of gold and silver.

To read more of my work you can read the rest of my blog: http://blogs.24.com/hubertmooolman

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

© 2010 Copyright Hubert Moolman - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules