Gold will shine in 2022. Stocks in freefall.
In this video, we take a look at the Dow Jones priced in Gold. This ratio can help break up the trends you see on a typical line graph for an individual stock or index. Sometimes you see that the nominal price of a stock is rising and you think the market is doing well. Then you compare it to something real and you realize it's actually crashing. A great comparison is the Venezuela stock market priced in their currency. It looks like it's the fastest-growing stock market in the world but they are having hyperinflation so the currency value of the stock doesn't really mean anything anymore.
As we look at the ratio we can see back in the great depression the down gold ratio hit around 1.8 on a weekly chart but it really 1 on a daily chart. That means it took 1-ounce of gold to buy the dow jones. Back in 1980, we see the same thing as gold went to the moon relative to stock prices again reaching a ratio of 1 ounce of gold to buy the DOW. I believe we are heading back to a similar ratio at some point in the next 10 years. If we look simply at the 2008 crisis we see it fell to a ratio of 6. Even if we take that same number then today's price of gold would have to rise to $5,000/ ounce if the DOW is at 33,615. If the down fell 20% from its high, which is on its way there right now, that would bring it to the $29,000 range, and gold still at $5,000 hits 5.8 or so. This tells me either the DOW has to fall to $12,000 which I find to be more unlikely after all this inflation, gold has to rise to $5,600 and the DOW stay still which is possible but again unlikely. Or, it is something in between where the DOW falls and Gold rises. I believe $5,000 gold is actually coming and one of my plays is gold miners using EPGFX because Adrian Day is the analyst involved and he's amazing in that industry. Another that can be played is GDX and GDXJ or a few individual miners but buyer beware.
I don't think these are great long-term plays as they are volatile but when they move up it's going to be fast at bitcoin-like numbers. There will come a time to sell and rotate into other assets like stocks of companies that have good dividends and low PE ratios. Hyperinflation is still on the table along with potential WW3 so keep that in mind as commodities are more likely to be the thing that is held in that time.
As we look at the ratio we can see back in the great depression the down gold ratio hit around 1.8 on a weekly chart but it really 1 on a daily chart. That means it took 1-ounce of gold to buy the dow jones. Back in 1980, we see the same thing as gold went to the moon relative to stock prices again reaching a ratio of 1 ounce of gold to buy the DOW. I believe we are heading back to a similar ratio at some point in the next 10 years. If we look simply at the 2008 crisis we see it fell to a ratio of 6. Even if we take that same number then today's price of gold would have to rise to $5,000/ ounce if the DOW is at 33,615. If the down fell 20% from its high, which is on its way there right now, that would bring it to the $29,000 range, and gold still at $5,000 hits 5.8 or so. This tells me either the DOW has to fall to $12,000 which I find to be more unlikely after all this inflation, gold has to rise to $5,600 and the DOW stay still which is possible but again unlikely. Or, it is something in between where the DOW falls and Gold rises. I believe $5,000 gold is actually coming and one of my plays is gold miners using EPGFX because Adrian Day is the analyst involved and he's amazing in that industry. Another that can be played is GDX and GDXJ or a few individual miners but buyer beware.
I don't think these are great long-term plays as they are volatile but when they move up it's going to be fast at bitcoin-like numbers. There will come a time to sell and rotate into other assets like stocks of companies that have good dividends and low PE ratios. Hyperinflation is still on the table along with potential WW3 so keep that in mind as commodities are more likely to be the thing that is held in that time.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.