Dow Down 50% Against Gold Since Last Record Dow in October 2007

Currency debasement is being seen internationally and will again benefit gold in the medium and long term. The second round of money printing by the Federal Reserve pushed spot gold prices to a record nominal high of $1,920.94/oz in September 2011.  Given continuing debasement new record nominal gold highs and indeed inflation adjusted gold highs over $2,400/oz will almost certainly be seen in the coming months.

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From Goldcore:

Today’s AM fix was USD 1,574.00, EUR 1,207.98 and GBP 1,043.42 per ounce.
Yesterday’s AM fix was USD 1,584.25, EUR 1,214.82 and GBP 1,044.33 per ounce.

Silver is trading at $28.68/oz, €22.10/oz and £19.09/oz. Platinum is trading at $1,596.70/oz, palladium at $736.00/oz and rhodium at $1,200/oz.

Gold rose $1.20 or 0.08% yesterday in New York and closed at $1,575.00/oz. Silver surged to a high of $29.07 and fell down to $28.51, but it still finished with a gain of 0.42%.


Cross Currency Table – (Bloomberg)

Gold edged higher in Asian and European trading today, supported by modest physical demand in Asia and from central banks. This continuing demand is creating expectations that prices will consolidate at current levels before moving higher again.


Dow Gold Ratio, 2003-2013 – (Bloomberg)

Prices have been range bound between $1,564/oz and $1,587/oz over the past few weeks which suggests consolidation.


INDU Index Weekly, 2003-2013 – (Bloomberg)

Currency debasement is being seen internationally and will again benefit gold in the medium and long term. The second round of money printing by the Federal Reserve pushed spot gold prices to a record nominal high of $1,920.94/oz in September 2011.

Given continuing debasement new record nominal gold highs and indeed inflation adjusted gold highs over $2,400/oz will almost certainly be seen in the coming months.

This currency debasement and ‘stimulus’ on a scale never before seen in financial and monetary history contributed to the Dow Jones Industrial Average reaching a new record high yesterday.


Gold Price Weekly, 2003-2013 – (Bloomberg)

The Dow Jones Industrial Average hit a new high yesterday, surpassing the previous high of 14,164 on 9 October 2007 leading to proclamations that ‘happy times are here again.’

However, importantly in gold terms, the Dow has not made any gains whatsoever, rather it has fallen by 50% (see chart).

In gold terms the DJIA has fallen from above 18 to 9.05 today and this clearly shows how the DJIA is not a good barometer for the health of an economy – especially one completely dependent on ultra loose monetary policies.

NEWS
Gold drifts on growth hopes; Asia buying lends support – Reuters

Gold Futures Advance on Stimulus Bets, Physical Demand – Bloomberg

Korea Joins Russia, Kazakhstan in Boosting Gold Holdings – Bloomberg

Turkish Feb Gold Imports Rise To 17.34 Tonnes – CNBC

COMMENTARY
Dow Jones High Should Not Be Mistaken For Growth In US Economy – The Guardian

Keiser Interviews Fekete About Paper Versus Physical Gold – You Tube

The Last Time The Dow Was Here… – Zero Hedge

Video: Byron Wien: Gold To Reach $1,900/oz – Bloomberg

 

SD Bullion

Comments

  1. The DOW, like all it’s brother indicies, is a paper traded ponzi scheme quagmire that is going to lure the unwary and unwitting into its trap as seniors, semi-pro investors and others with a few nickels to rub together will jump on this ride to get away from ZIRP.  Earning .01% in an MMA may be the safest bet now, outside precious metals. 
      Those who venture into these paper trading schemes will be hurt badly and in relatively short order.  Recall the fever pitch of the DOW in 2007 when it hit 14,000.  It was half that level within a year. I give this QE stimulated orgasm of equities surge maybe a year but probably less.  All it will take is one important name at a central or mega bank to say the emperor is screwed and this whole thing will drop like a rotten bundt cake.
     The S&P is in a triple top right now.  40% of the S&P copanies rely on the Eurozone which is in a recession at best and depression at worst   All this will end in tears for those who enter the market now.  The financially illiterate enter these markets at the top. The wise investor is exiting.  The ratio of inside seller is 50 to 1.  The rats are leaving the ship.

    • “Those who venture into these paper trading schemes will be hurt badly and in relatively short order.  Recall the fever pitch of the DOW in 2007 when it hit 14,000.  It was half that level within a year. I give this QE stimulated orgasm of equities surge maybe a year but probably less.”
       
      Agreed.  If we’ve learned anything in the past year or so it is that the paper Ponzi scheme is being slapped around by the Law of Diminishing Returns, big-time.  All of the things that are being done to manipulate the markets are requiring more to do less for a shorter time period.  This will not be an exception.  
       
      My thought is that this slow motion train wreck is still in progress and likely will continue to be for at least the next 4-5 months.  As an investor, I am VERY concerned about the 2nd half of 2013, more concerned than that about 2014, and absolutely terrified of 2015.  Because of this, I am still about 2/3 in cash and 1/3 in commodity and utility ETFs.  All of these are set up with trailing stops in place.  If the market tanks, I should have some downside protection from the stops.  Yes, I know that these are not a perfect defense, etc. but they are WAY better than anything else available to the retail investor… so I use what is available.  I am hoping to make 6-7% on the money I have invested and that I manage for family members.  During the coming summer, I will be sanding the tip of my right index finger and resting it very lightly on my left mouse button.  If the market even twitches at that point, I am outta there.
       
      The stack, of course, continues to grow in both silver and gold ounces.  Other preps do as well with more food, water, ammo, and other useful goodies being added on a weekly basis.  Things are gonna get VERY interesting over the next several months.  I’m glad that I am a man who takes a drink now and then.  I would sure as hell hate to face this crap sober!
       

    • Question is will we see a recovery this time around with the USA still resembling the same country after the recovery?

  2. I’ve heard that if the Dow is going up right now, it is largely due to stimulus with QEs and not due to the economic growth because it doesn’t exist anymore on this debt system. Gold and silver are the best way to preserve your wealth, not stocks!

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