Dow Jones/Gold Relative Ratio, Annual Data from 1896

This chart from technician John Roque shows periods of Dow/Gold ratio. The first two bold blue lines highlight the 14-year periods when gold outperformed the DJIA (1928-1942 and 1965–1979). The current third bold line shows that gold has been outperforming the DJIA since 1999 – implying we are ½ way through this cycle.
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DJIA / Gold Relative Ratio, Annual Data from 1896

Djia_gold_relative_ratio

Source: Natexis Bleichroeder
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Roque notes that the long term average for this ratio is 9.5 and as of March 31, its 18.9. The current cycle could run to ~2013 or until this ratio gets down to the single digits like. Either way it looks like gold (and commodities) have further to go.

I should have more on this in a related research project in a few weeks . . .

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