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Below is a look at the 100+ year Dow/Gold ratio chart that was passed along to us by a KWN reader.  Take a look at the peaks in the Dow/Gold ratio from 1929 (18.4 to 1), 1966 (27.9 to 1), and 1999 (an astounding 43.7 to 1).  Two of the major lows took place in 1932 (2 to 1), and 1980 (1 to 1).  Interestingly, by 2011 the Dow/Gold ratio plunged from 43.7 to well under 10 to 1 (see below).


 


Since 2011, as the Dow Jones has continued to rally and gold has struggled in a bear cycle within its secular bull market, the Dow/Gold ratio has risen back above 13 to 1.  It is nearing the green line of resistance on the chart above which capped the peaks of countertrend rallies in 1937, and also during the mid-cycle bear market which ended in 1976 (see upward assaults on the green trendline in 1937 and 1976 on the chart). 


If the ratio stays below the green historic trendline, that means the Dow/Gold ratio is either turning in favor of gold right now, or is very close to turning in favor of gold....


Continue reading the KWN piece below...  




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To put things into perspective, some have suggested the ratio is headed back to 1 to 1, but let’s just say that the ratio were to fall to the 1932 level of 2 to 1:  If stocks remained stagnant near the 17,000 level (which is unlikely), that would mean a shocking gold price of $8,433.  Imagine if the Dow went virtually nowhere in coming years and the price of gold rallied over $7,000. 


You can do the math yourself if you think the ratio is headed to 1 to 1.  The point is, this is part of the massive wealth transfer that is still in front of us.  It will be from those holding paper assets to those invested in hard assets.  And don’t forget, the mining shares went through a mania at the end of the 1970s gold bull market.  We can expect the same to happen this time, despite all the negative propaganda to the contrary.


© 2014 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.


IMPORTANT - KWN has many more interviews being released today.


The audio interviews with Grant Williams, Andrew Maguire, James Turk, Jean-Marie Eveillard, Egon von Greyerz, Dr. Paul Craig Roberts, Ben Davies, David Stockman, Bill Fleckenstein, MEP Nigel Farage and Dr. Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.


Eric King

KingWorldNews.com

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