Gold to Dow Jones Index – May 2017
We’re not going to join the chorus of market timers that are trying to pick a peak price for gold. Instead, we’re going to watch golds relationship to the Dow Jones Industrial Index. As our thermometer indicates, the ending ratio of the price of an ounce of gold, compared to the DJI, increased with each gold bull market over the past 110 years – in 1904, 1933 and 1980. We think that this time gold will not stop rising until the dollar value of an ounce of gold will buy one share of the Dow.
As of May 31, 2017 one ounce of gold at $1,275.00 would buy 0.06 of a share of the Dow Index, trading at 21009. This means that over the next 5 to 10 years, gold is likely to increase by a factor of 16.5, or the Dow will drop by a factor of 16.5 or – more likely – some combination of the above. We update our thermometer monthly and invite you to tune in to watch gold’s progress.