As we inspect the value of the Dow Jones Industrial Average against the value of real money (Gold), we find that the purchasing power of the US Dollar is equal to that of the 1929 stock market peak. Meaning that people are no more wealthy now than they were nearly 100 years ago. Notice, that I’ve take the last known value of the dollar against gold at $1=20.67ths of an ounce. Why Gold? Because gold is tangible, gold is finite, gold has been used for thousands of years as a measure of value. On June 5th 1933, US President Franklin Roosevelt signed into law a congressional resolution abrogating all gold clauses within contracts therefore taking the United States officially off of the Gold Standard. Just prior to this act, FDR, through executive order, demanded all gold coin, gold bullion, and gold certificates be turned in and redeemed for $20.67 per ounce of gold.
In 1934, after the United States was in full possession of all of the physical gold they purchased for $20.67 per ounce, Roosevelt changed the price to $35 per ounce and the government printed 3 billion new dollars. This injected new cash flow into the economy and brought the country out of the depths of The Great Depression.
Fast forward to 1971. Richard Nixon, facing a similar cash flow issue, used the power of the pen to fully sever the relationship between the dollar and gold. From that point forward, the United States currency was ethereal. A central bank manipulates the money supply and each dollar is backed by the good faith and credit in the United States of America. All of this being said, just because homes and other investments are worth more dollars, does not mean that a person is more wealthy today than they were in 1929. As this chart demonstrates, it only means that the value of your dollar is worth far less then it was 100 years ago since you can exchange one share of the Dow Jones in gold as you could in 1929.
But wait, there’s more. The Elliott Wave pattern you are seeing here is know as an expanded flat. Ever since March of 1966, this ratio has been carving out subwaves to complete the pattern. In November 2021, we began the infamous “third of the third” decline. Soon this wave will accelerate to the downside in epic fashion transferring wealth along the way. Because if you, like me, sold your stake in securities and bought cash and gold, your value is frozen in time and even increasing if you bought gold. When the time comes that this chart puts in its final low, well below an ounce per share, you’ll have plenty of capital to scoop up the pieces.
In 1934, after the United States was in full possession of all of the physical gold they purchased for $20.67 per ounce, Roosevelt changed the price to $35 per ounce and the government printed 3 billion new dollars. This injected new cash flow into the economy and brought the country out of the depths of The Great Depression.
Fast forward to 1971. Richard Nixon, facing a similar cash flow issue, used the power of the pen to fully sever the relationship between the dollar and gold. From that point forward, the United States currency was ethereal. A central bank manipulates the money supply and each dollar is backed by the good faith and credit in the United States of America. All of this being said, just because homes and other investments are worth more dollars, does not mean that a person is more wealthy today than they were in 1929. As this chart demonstrates, it only means that the value of your dollar is worth far less then it was 100 years ago since you can exchange one share of the Dow Jones in gold as you could in 1929.
But wait, there’s more. The Elliott Wave pattern you are seeing here is know as an expanded flat. Ever since March of 1966, this ratio has been carving out subwaves to complete the pattern. In November 2021, we began the infamous “third of the third” decline. Soon this wave will accelerate to the downside in epic fashion transferring wealth along the way. Because if you, like me, sold your stake in securities and bought cash and gold, your value is frozen in time and even increasing if you bought gold. When the time comes that this chart puts in its final low, well below an ounce per share, you’ll have plenty of capital to scoop up the pieces.
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