Dow/Gold Ratio (plus Dow)

Monday, March 12, 2007 | 10:00 AM

Fascinating chart from David Singer; I am still struggling to decipher just what it means.

The Bar Chart is  the ratio of Dow Industrials to Gold; it asks, how much Dow does an ounce of Gold buy?  The line on the chart is the Dow.

It makes some sense that there is a parallel between Gold and the Dow, given the impact of inflation and geopolitical risks on both.

The divergence since 2003 -- when interest rates were slashed to generational lows, and the War in Iraq began.

Gold_dow


If anyone has another theory or explanation, I am all ears . . .


Monday, March 12, 2007 | 10:00 AM | Permalink | Comments (48) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00d834ebdb1353ef

Listed below are links to weblogs that reference Dow/Gold Ratio (plus Dow):

Comments

The post '03/911 world is also the one when US growth slowed long-term, the world developed 'excess' liquidity for multiple reasons and the level of geo-political risks (especially oil) became clearer. Prior to '03 it looks to me as if gold and the Dow were responding as highly correlated asset classes. Post '03 it looks liquidities, ala Gross, et.al., is driving the Dow up while risks are shifting the relative prices of stocks vs. gold.
If that resonates with anyone then the questions that should be asked are so what and what next ? In other words why are risk premiums so low - did they just get bid away and is risks badly, badly, badly mispriced ? And is so will the re-pricing of risk that should have occurred in sub-prime work it's way thru other assets classes ?

Fascinating chart. Please thank Mr. Singer. Would love to hear his comments and reactions to the risk vs liquidities vs re-pricing issues.

Posted by: dblwyo | Mar 12, 2007 10:14:10 AM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner