The Dow/Gold Ratio is the ratio of the price of the Dow to the price of gold. More simply it is the number of ounces of gold required to buy one unit of the Dow.
While analysts are quick to proclaim the end of the 'Great Recession', its worth noting the continuing decade long bear trend in US equities.
Are we headed for another leg down in the equity markets ?
Valuations were running ahead of fundamentals and the current correction comes as no surprise!
The massive stimulus packages, the expansion in the US monetary base, and the FED buying almost $1 Trillion worth of US Mortgage backed securities, means that this was no 'garden variety recession'.
In the near term, the stock market sell off will result in a stronger USD, and this can put further pressure on the price of Gold.
However, patient gold bulls will be rewarded for their patience. This is one bullion market that you can't afford to miss!
Investors with a cash on hand can look forward to eventually increasing their equity market exposure, once valuations revert to more reasonable levels.