Monday , 4 December 2023

What Does the Future Hold for the Dow:Gold Ratio? (+2K Views)

The Dow:Gold ratio is defined as the ratio of the price of the Dow Jones Industrial Average divided by the price of gold [or] how many ounces of gold it takes to buy the 30-stock Dow. The current Dow:Gold ratio of 8.5 is up 21.1% from its 17-year March 6, 2009 low of 7.0 and 81% below its 1999 peak of 44.77. [What does the future hold? Higher gold prices, lower stock prices or vice versa?] Words: 400

So says Kirk Lindstrom in an article which Lorimer Wilson, editor of, has further edited ([  ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.)

Lindstrom goes on to say:

[Let’s take a look at the chart below for some insights.]
Click for larger image

200 Year History of the Dow:Gold Ratio

The DJIA-to-gold ratio got down near 1 in the early 1980s and was just under 0.2 in the early 1800s as the 200 Year Dow:Gold chart below shows from 1800 through August 2008. At 8.5:1 today the ratio is trading below the green zone and the chart clearly shows that, historically, buying stocks when the ratio is below the green band was [always very] rewarding if you had patience.

(Click to enlarge)

What’s Next for the Dow:Gold Ratio?

What is the best investment going forward? Below is a chart of the price of gold, its exchange traded fund GLD, the DJIA and the S&P500 [that begs the concluding questions]:

    1. Will stocks surge and the price of gold crash to break this decade long downtrend?
    2. Will gold surge and/or stocks fall to take this ratio lower for another run at its support level now below 2.5?
    3. Will both gold and stocks continue higher breaking the downtrend but not explosively?