What Happens When The DOW Index Drops And The DOW/Gold Ratio Climbs

I wrote an article one year ago stating that ONE OUNCE OF GOLD WILL AGAIN BUY THE DOW.

http://www.whynotgold.com/archives/ONE_OUNCE_OF_GOLD_WILL_AGAIN_BUY_THE_DOW-96.html  

In that article I explored the possibility that gold could move up to an extreme as Jim Sinclair and gold bugs believe, of $36,000 or feasibly drop to $900 as Harry Dent believes. The obvious upside to gold versus the downside appeared obvious.

BUT what if the DOW to Gold ratio does not reverse and continues to climb (as it shows on the next two graphs) from today’s 1:13.5 and starts to climb to 1:18 as it did during the Great Depression or 1:44 as it did during the Dotcom explosion and subsequent NASDAQ crash of 2000?

I am not suggesting that $205 gold is imminent by any means. However, if the trajectory of the DOW to GOLD ratio continues up (as shown on this graph) -- and the DOW drops 50% settling at 9000, Gold may well drop in price as well. A normal range for the DOW to GOLD ratio MIGHT be down around 8-10:1 as a moderate ratio which would also show gold price dropping to $1125-$900 an ounce.

The impending collapse of the stock market is a given. Consequently, its effects will be catastrophic as there will be no safe harbor for anyone and as people AGAIN will lose their retirement funds, their housing values and their jobs. Far fewer people will have much left to buy precious metals with. They will focus on keeping any job or several in order to keep food on the table, the heat on and a roof over their heads. The “lawnmower economy” THEY have created will devastate the world and the U.S. as we are turned into a third world county replete with criminal government, a virtual Banana Republic. The Central Banks would continue to steal or buy all the real stuff for funny money and laughing all the way to their vaults as they take the LAST of your life’s savings.

My most recent article to awaken the constituency reported the overreach of TAVEX (a large metals wholesaler who allowed ANYONE to send their money abroad to purchase metals) by SEB in closing their bank account. They currently have no way of accepting wires or conducting business and a thinking individual might guess that the elite have tipped their hand. The plan is not to confiscate your metals but to shut down gold and silver dealers preventing capital flows from the common man into real assets of gold/silver/platinum or palladium. They don’t want you to have your assets out of their reach where they have no control over them. The elite are truly concerned that the awakening 99%, who own no metals are beginning to react and to buy metals, which would send the prices skyward and alter their plan to amass it for themselves to control the populace in need of food, shelter and a FEMA camp. THEY HAVE A PLAN and whether it be a ramping up of the new Civil Asset Forfeiture program to fund their police (similar to the Roman Empire’s theft from the citizenry to fund their military), to implementing the program Operation Choke Point to shut the availability off completely. Either way you and I lose and we will have a difficult time surviving.

This next chart presents what the DOW to Gold ratio has been doing over the past 8 years and again it appears that the ratio shows no signs of giving up its title. In fact as countries continue to race to the bottom printing or rather digitizing cyber digits on a computer screen I have no reason to believe that the ratio will drop but continue upwards until each and every countries currency and people are destroyed.

Speaking of ratios if you hadn’t noticed, Platinum has been a great buy since the late 2011 as a safe haven for your assets. The price currently sits at a Platinum to Gold ratio of 0.79:1 and WELL BELOW support levels as the next charts show. Platinum could easily double spike to 2.4:1 or $3240 as the ratio did in 2001 and again in 2008 or as high as 5.2:1 or $7020 as the ratio did in 1970. Wow, that would be an increase of 240% to 520% respectfully and would easily compete with the rate of return on gold stocks of HUI or GDX while you held a REAL asset during an uneasy point in history.

I may be either bold and or stupid - and I just might be the ONLY one saying so, but just MAYBE gold isn’t going to the moon just yet and emotions are playing hands. This could be a great head fake, but I simply wouldn’t put anything past those in control and their dastardly plans. A contrarian must consider all motives of the elite. I will say this, act now to get your savings OUT of the systems. Otherwise, the controllers will ruin you and your family forever as they play their next hand. They will ALWAYS win the title to your assets!