Everyone is focused on the mania in stocks that comprise the Dow and Nasdaq, but the world will see skyrocketing gold and silver prices.
Dow to Gold Ratio – 100 Year Historical Chart
MacroTrends: This interactive chart tracks the ratio of the Dow Jones Industrial Average to the price of gold. The number tells you how many ounces of gold it would take to buy the Dow on any given month. Previous cycle lows have been 1.94 ounces in February of 1933 and 1.29 ounces in January of 1980.
King World News note: As you can see from the chart above, the cyclical bear market in gold and bull market in the Dow have simply allowed for a corrective countertrend rally in the Dow/Gold ratio (see right hand side of above chart)…
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As the ratio begins to rollover when the Dow enters its next bear market and gold begins the final, violent leg of its secular bull market advance, the Dow/Gold ratio will begin the journey to a ratio of between 1/1 or 2/1, from its current elevated ratio of roughly 17/1. Either way, that will mean skyrocketing gold prices for the gold bulls that have not been shaken out by the brutal bear market.
The chart below is a look at the Gold/Silver ratio over a 52-year time period.
You can see the massive outperformance of silver vs gold in 1980 and 2011 (with the price of silver highlighted in orange). Even as the price of gold begins to massively outperform the Dow, culminating in a cycle that ends at 2/1 or 1/1 on the Dow/Gold ratio, silver’s price advance will be even more remarkable. For the silver bulls that have remained strong it will be one heck of wild ride.
The Bottom Line
The bottom line is that this massive secular bull market in gold and silver will be one for the history books before it is over, and no government or set of governments or central banks will be able to stop it. The artificial paper price manipulation (that currently feels like it will never end) will fail just like it did for the London Gold Pool in the late 1960s. And when it fails, the upside gains in gold and silver will be breathtaking.
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