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  Dow-to-Gold Ratio Suggests Gold Prices Should Soar  
  Lorimer Wilson on 2017-12-20 15:38:58.0
 
 

Don't get too distracted by soaring stock markets and parabolic gold    risecryptocurrencies. Pay attention to gold prices. The yellow precious metal continues to present the opportunity of a lifetime…Gold is selling at a severely low valuation among all the other assets out there and it's extremely ignored. It could soar.

The original article by Moe Sulfiqar has been edited for length (…) and clarity ([ ]) by munKNEE.com to provide a fast & easy read. For all the latest - and best - financial articles sign up (in the top right corner) for your free bi-weekly Market Intelligence Report newsletter (see sample here)

One of the best ways to look at the value of gold relative to stock prices is to look at the Dow-to-Gold ratio. At its core, this says how many ounces of gold it takes to buy one share of the Dow Jones Industrial Average (DJIA). Look at the chart below. It plots this ratio since 1970.

Chart courtesy of StockCharts.com

Currently, the Dow-to-Gold ratio stands at 19.74. This means it takes 19.74 ounces to buy one share of the DJIA. The average monthly Dow-to-Gold ratio since 1970 is around 13 so if we assume the Dow Jones Industrial Average remains at the current level (24,800) and this ratio moves toward its long-term average of 13, then gold prices would have to increase to around $1,900. That's roughly 50% above the current price.

This ratio has gone as low as 7.5 in 2012 and 1.5 in 1980 and, if we assume it hits 7.5 and the Dow remains at the current level, gold prices would have to reach roughly $3,300 an ounce!

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The post Dow-to-Gold Ratio Suggests Gold Prices Should Soar appeared first on munKNEE dot.com.

 
 
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