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Dow / Gold

Posted By Barry Ritholtz On October 20, 2006 @ 11:15 am In Commodities,Technical Analysis | Comments Disabled

Yesterday, the Dow closed above the 12,000 for the first time.

For some further perspective into the current rally, Chart of the Day 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!

20061020 [1]

Source:  Chart of the Day [2]


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[1] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/20061020.gif

[2] Chart of the Day: http://www.chartoftheday.com/20061020.htm?T

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