Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in

Gold versus the Stock Market

IMG Auteur
Published : October 14th, 2005
691 words - Reading time : 1 - 2 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Editorials





While Wall Street pundits extol the virtues of the stock market, and its promise of assured riches, they consistently denigrate gold, and its value as an investment alternative. Gold, they chide, is an arcane relic, as out of fashion as the leisure suits worn during the decade they naively perceive as the metal’s last hurrah.


However, as fashions come and go, gold is once again back in style. This week gold’s successive run of eighteen-year highs occurred in sharp contrast to a slumping stock market. Since the Dow ‘s 11,722 peak (which at the time equaled 41.3 ounces of gold) reached on January 14, 2000, the index has now lost almost half of its value relative to gold. As I write this the Dow Jones is currently worth about 21.6 ounces of gold. If we go back to the peak of the preceding bull market, in which the Dow topped out at 1,000 in 1966 (which at the time was 28.6 ounces of gold,) the index has actually declined in value by 25% when priced in gold. Finally, if we go all the way back the peak of the bull market prior to that one, when the Dow Jones stood at 381.2 in 1929 (19.06 ounces of gold) the Dow has only managed a 13.3% gain. Not much considering it’s taken almost seventy years!


However, this is only part of the story. The current bear market in stocks and bull market in gold are relatively new. If history is any guide, before these cycles turn, the Dow will lose a far greater percentage of its value relative to gold. For example, at its low in 1932, the Dow Jones was worth just 2.06 ounces of gold. (The Dow was 41.20 and gold was $20 per ounce) However, as Roosevelt confiscated gold and devalued the dollar the following year, using a $35 gold price, the 1932 low actually represented just 1.18 ounces of gold.


In 1966, with Apollo astronauts reaching toward the moon, and stock prices headed there as well, no one would have imagined that the Dow’s 1932 gold-price low would ever be taken out. However, by January of 1980, when gold traded at its all-time high price of $870 per ounce, eclipsing the value of the Dow, that is precisely what happened. That year marked the all-time record low for the Dow priced in gold, 96.5% below its 1966 peak and 95% below its 1929 peak reached 50 years earlier!


Twice during the last century the Dow lost over 90% of its value relative to gold. If such declines could occur in an America with a strong industrial economy, ample domestic savings, and a favorable balance of payments, imagine what could happen today. History clearly demonstrates the danger inherent in over-paying for stocks, both relatively to their intrinsic values and the price of gold. Those who bought into the new era nonsense of the 1990’s will fare no better than those who judgments were similarly impaired during the 1920’s and the 1960’s.


My guess is that in the years ahead the Dow will once again retest its gold-price lows. If we can put in a solid, long-term triple bottom at approximately 1 to 1, (which might be Dow 4,000, gold $4,000 per ounce) stocks would likely be a great buy. Until then the smart money is increasingly moving to gold.


Don’t ride this bear market out. Get out of U.S. stocks and out of the dollar. Start by downloading my free research report “The Collapsing Dollar: The Powerful Case for Investing in Foreign Equities” at  www.researchreport1.com and while you are at it buy some gold! Visit www.goldyoucanfold.com to discover the best way to acquire it.



Peter D. Schiff

President/Chief Global Strategist

Euro Pacific Capital, Inc.

20271 Acacia Street, #200 Newport Beach, CA 92660

Toll-free: 888-377-3722 / Direct: 203-972-9300 Fax: 949-863-7100

www.europac.net

pschiff@europac.net



For those of you still holding dollars, time is running out to protect the wealth to which those dollars current represent claims.  A good first step is to down load my free research report “The Collapsing Dollar: The Powerful Case for Investing in Foreign Equities”  available at www.researchreport1.com


 







<< Previous article
Rate : Average note :0 (0 vote)
>> Next article
Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for nineteen years he joined Euro Pacific in 1996 and has served as its President since January 2000. An expert on money, economic theory, and international investing, he is a highly recommended broker by many of the nation's financial newsletters and advisory services. Mr. Schiff holds NASD Series 4,7,24,27,53,55, & 63 licenses.
WebsiteSubscribe to his services
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Farage Interviews Le Pen: “Prison of the EU”
21 Marneville
BRITANNIA RULES THE WAVES AND NOW BREXIT WAIVES THE RULES. GO FOR IT FRANCE AND RID YOURSELVES FROM THE CHAINS OF IDIOTS. NOT SIN...
How the Fed Operates — And Why It's a Problem
20 Marramasart
In a nutshell, the Fed facilitates the theft of the value of the dollar, as they can control the increase in supply which at the same time inverts ...
How the Fed Operates — And Why It's a Problem
20 Marneville1
With all due respects for outlining how the crooked american Fed works or should work. From all our research we find the following the Fed...
Sparta - Gold prohibition in a collapsing economy
18 Markevthorne
You've answered none of the authors points: your comment is flat rubbish.
America Too Broke to Fix Crumbling Infrastructure? “Bridges, Roads,...
16 MarCameron Waugh1
Just like the leaders of the Bolshevik revolution were not Russians, those formulating belligerent US foreign policy are not Americans, and they ha...
POTUS at SOTUS
16 MarDRGEORGE1
Try explaining that to my patients dying on public waiting lists or getting ripped off by exorbitant private specialist fees!
POTUS at SOTUS
08 MarS W.0
I don't know what hallucinogens Dr G is on but my experience, both working in, and using the health system in Oz is that it is very bloody good.!
POTUS at SOTUS
07 Marstew temby
The best way around costs in the Aussie health/dental care systems in Australia is to travel to SE Asia for whatever you need to have done. Insurer...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS