This is the only bear scenario to get me going to the toilet. Louise Yamada muses that an argument can be made that the Dow to Gold ratio might not go down to one (or less) at all. Most gold bugs (like Richard Russell and Peter Schiff) figure the Dow, representing US stocks, is fated to continue its decline against Gold until a ratio of at best 2 is reached, and possibly below one. However the ratio is now behaving as if it could be in reversal from a low a bit above 6 (currently about 8.9) Louise Yamada points out that previous secular declines of the DJIA (Dow) against Gold took 15 years to complete. They both declined to less than a 2 ratio. This third one has already used up 13 years and the ratio is only at 8.9 Then she zooms in on a 35 year ratio chart to show: 1/ The down trend of the ratio has been losing velocity - breaks above brown then green downtrend lines 2/ A basing pattern bowl (mauve line) seems to be forming, which might be signalling a 'structural' reversal. A basing pattern did not appear in either of the prior two 'structural' bear markets of the Dow against Gold until they bottomed. That is, shes suggesting that stocks in US might be starting to become a better investment than gold long term, and the goldbugs' target of being able to buy one share of the DJIA with an ounce of gold or less will never be remotely achieved. Quote, "Is it possible that the ratio could make a structural shift at a ratio of 8:1 rather than falling to the 2:1 ratios of history? Could the Fed action alter the ratio turning level?" http://kingworldnews.com/kingworldn...ada_-_4_Spectacular_Gold_&_Silver_Charts.html
