Still in a bear:Dow Jones Index to Gold Ratio Historical Chart

In the early 1980s, just before the mega-bull market was about to awaken, you only needed 1.5 ounces of gold. But at the top, in 1999, you needed almost 49 ounces of gold to afford the Dow.

Over time, the two dont always move opposite each other but during the past few years, not only has the stock market fallen, but gold has gone up. That has resulted in an unwinding of the ratio.

While the Dow Jones Industrial has only fallen 25% from its 1999 top, priced in gold, it has fallen almost 80%. Were back to the levels that we saw in the early 1990s

But of course, this ratio is ignoring dividends which gold doesnt pay but the Dow does pay. I wonder what the chart would look like with that taken into account. Probably very similar.

Whether were seeing the birth of a new bull market or not, this ratio is not convinced that stocks, relative to gold are really cheap. Or at least, as cheap as weve seen them. Keep in mind that while the market may at times rhyme, it rarely repeats itself.

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Kyith

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