Stock market investors continue to hold on to their stocks in the hope that we will again see bull markets like in the 1980s and 1990s. But looking at the very long term Dow/Gold ratio chart this optimism seems unfounded. The chart shows a major “megaphone” pattern that has a target of 1. This would mean that gold and the Dow would be equal in value. It would also mean another 90% fall of the Dow against gold. In my view the pattern will probably overshoot and we will go well below a one to one ratio.
Even if we “only” go to a Dow/Gold one for one ratio, at what level would that be? For many years I have forecast gold at $10,000 dollars, and that would mean the Dow would be at the same level. But remember this means that gold would go up 6 times from here and the Dow would be down 16%. With hyperinflation gold could go considerably higher. So investors who want to preserve their wealth in the next few years are likely to do much better by owning physical gold than stocks.
Egon von Greyerz
Matterhorn Asset Management AG
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/31_Greyerz_-_Market_Chaos_%26_Incredibly_Important_200_Year_Chart.html
Even if we “only” go to a Dow/Gold one for one ratio, at what level would that be? For many years I have forecast gold at $10,000 dollars, and that would mean the Dow would be at the same level. But remember this means that gold would go up 6 times from here and the Dow would be down 16%. With hyperinflation gold could go considerably higher. So investors who want to preserve their wealth in the next few years are likely to do much better by owning physical gold than stocks.
Egon von Greyerz
Matterhorn Asset Management AG
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/31_Greyerz_-_Market_Chaos_%26_Incredibly_Important_200_Year_Chart.html
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