Dow/Gold

Click chart to enlarge

Chart courtesy of http://www.chartoftheday.com/

Yesterday, the Dow edged above the 12,000 milestone for the first time. Considering the magnitude of the past bear market, it is a great achievement indeed. For some further perspective into the current rally, today's chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / Gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 20.1 ounces of gold to “buy the Dow”. This is considerably less that the 44.8 ounces back in the year 1999. When priced in gold, the current stock market rally hasn't amounted to much. In fact, the longer-term trend is actually down!

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." - Alan Greenspan