Dow-gold chart may be confirming what sunspot predictions show - rising equities (but how much?)

The Dow is down 78% percent in terms of gold, meaning in terms of how much gold it takes to buy the Dow Jones Industrial Average (Dow Industrials). First a quick comment - Those interested in the sunspot cycle and/or the Dow-gold ratio may be interested in taking a look at my previous post on this topic, Cycles review, Part XII: Solar (Sunspot) cycle (eeriely similar to the popular Dow/gold chart!) - or, if it's in our stars, why not the closest one?! (5/31/2009)(if you haven't already - or, might be time for another look). This seems a good time, since the folks at "Chart of the Day" have issued an update to the Dow-gold chart confirming what you already know or suspect, that the Dow has risen even in ratio to the gold price. Makes sense, since the Dow Industrials have risen since March 2009, even while the gold price has stagnated since then. My point of the May 31 post was that the Dow-gold ratio chart looks eerily like NASA's sunspot cycles ... which they projected to pick up from a 2009 low. Now, look - we don't know how accurate their sunspot projections are; and besides, the eerie correlation is to the Dow-gold chart (not the normal Dow chart in U.S. dollars) - so in making some use of this, we cannot necessarily think it's the Dow that goes up or that gold goes down (or maybe a bit of both, or maybe the apparent correlation just breaks).

Certainly 78.6% is a great Fibonacci number, so maybe this is another clue of the importance of the March 2009 lows ... They do point out (below) that this ratio is at an important resistance test - so this also goes along with what we're seeing both in equities and in gold, that important levels are being tested. Gold being at $960 is a very important level - above that implies significantly higher movement, but if it holds as resistance then gold may move substantially lower. And we know equities are at important levels - which some will see as sending equities back to re-test the March lows, but others will see as merely a pause before another leg higher.

Well, let's take a look at the Dow-gold chart as updated and along with the brief comments from "Chart of the Day":

Chart of the Day - Dow down 78% this Century
Today's chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 9.8 ounces of gold to “buy the Dow.” This is considerably less that the 44.8 ounces it took back in 1999. When priced in gold, the US stock market has been in a bear market for the entire 21st century and is currently trading 78% off its 1999 highs. The recent five-month rally, however, has the Dow (priced in gold) putting in a significant test of resistance of an accelerated downtrend that began in mid-2007.


Chart of the Day is provided to subscribers without warranty of any kind and accepts no responsibility for its accuracy or for any consequences of its use. Journalists and bloggers may post the above free Chart of the Day on their website as long as the chart is unedited and full credit is given with a live link to Chart of the Day at http://www.chartoftheday.com/.