Dow to Gold Ratio

Long Term Valuation Tool

DYI:  The Dow to gold ratio will let you know when the major turning points for stocks vs precious metal and other natural resources.  The year 2000 the Dow Jones Industrial average was at a staggering 43 to 1 – [Dow 11723 ÷ $275 = 43(rounded) to 1.  The average since 1900 is around 10 to 1.  This makes the Dow 330% above its average thus showing how overvalued stocks were (especially high tech) and how cheap gold was at that time (under $300 per troy ounce). 

Gold today is now over $3000 per troy ounce and yet despite that massive rise the Dow to Gold ratio is currently at 14 to 1 (rounded) highlighting that gold still has room to move up much higher. 

IMO the Dow to Gold Ratio when this super cycle is completed gold will be massively overvalued and stocks, once again, on the give-away-table just as stocks were in the early 1980’s.  The Dow to Gold ratio will end the gold run around 3 to 1 or even possibly 1 to 1.

DYI will be selling gold/silver systematically and buying systematically stocks with absurdly low PE’s and wonderfully high dividend yields setting up for huge gains in the future.