Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Dow Gold Ratio

Commodities / Gold and Silver 2017 Dec 11, 2017 - 08:42 AM GMT

By: Rambus_Chartology

Commodities

This next set of ratio charts I consider to be the most important ratio charts if you are deciding whether to be an investor in the INDU or in Gold.

When the price is rising The INDU ( Dow Jones Industrial Average ) (a proxy for General Stock Markets) is rising against Gold , and when it is falling Gold is rising against the Dow.


This first ratio chart for the INDU:Gold is a daily look which shows the ratio breaking out above the top rail of a bullish rising flag with a completed backtest. It doesn’t look that impressive on a daily chart, but when we look at the longer term ratio chart it becomes very important.

Below is a long term 10 year weekly chart which shows a massive H&S bottom on the ratio chart on top and a possible massive H&S top on gold on the bottom chart. Note how the blue bullish rising flag formed just below the neckline on the ratio chart which has given the ratio chart the energy it needed to finally breakout. I’ve been showing this ratio combo chart for a long time now so the breakout above the neckline is falling into place.

Below is a 38 year daily line chart for the INDU:gold ratio chart which puts the very big picture in perspective. This ratio chart tells you when you need to be trading in the INDU and out of Gold and visa versa. As you can see you wanted to be trading in the INDU going into the 2000 bubble top and out of gold. In 2000 that all changed. From that point forward you wanted to be trading in the PM sector staying away from the INDU.

There are many gold investors that swear that the ratio has to go as low a 1 to 1 before the gold bull market is over. As you can see the ratio got as low as 5.5 in 2011 which is close enough IMHO especially since the price action that followed that double bottom low. There is a massive H&S bottom with the breakout underway. We have a very clear line in the sand for the staunch gold bulls which is the neckline. As long as the price action trades above that neckline the INDU is going to outperform gold.

As the breakout is just now taking place this ratio could rise for many years to come regardless of all the reasons it can’t. I will have no problem reversing my stance if I see the neckline is broken to the downside, but until it is I have to give the ratio chart the benefit of a doubt.

All the best

Gary (for Rambus Chartology)

http://rambus1.com

FREE TRIAL - http://rambus1.com/?page_id=10

© 2017 Copyright Rambus- 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.

Rambus Chartology Archive

© 2005-2022 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