The Dow Jones Industrial to Gold ratio has reached a key resitance area near the 15 level for the completion of what we believe was corrective wave 4. We are expecting a continuation of the bearish move with the final downwave V. First target near the 2011 low of 5.69.
Dave, this is interesting chart but with gold down 300 pts how does that impact your forecast? Are you expecting Dow or gold to drop from here? What actual price targets do you correlate with your target of 1?
Thanks,
powerintegral
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Hi CoolCreekCTA, as long as down trend line and stop level near 16.95 hold on a weekly close, I remain bearish on this ratio. It's hard to tell at which levels they would meet but I think the most important is to stay open minded since we have entered a phase on instability like no one alive has ever been through. For now, I believe that most probably governments will try to hyper inflate the economy in order avoid the unbearable weight of their debts in a otherwise deflationary environments. Assets will eventually leave the bond market to enter any hard assets, from stocks to commodities. So will the Dow and Gold meet at $30 000 or $5 000 ? It's hard to tell, anything is possible. I would personally prefer holding gold considering its oversold condition vs the weakening one of the Dow. And if Stanley Druckenmiller think that it's a good idea to put 30% of its family fund in GLD (as its latest 13-D filling is showing), then most probably it's a good idea for most of us to own some gold. Even more if it drops near or below the $1000 level.
Thanks,