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Is Dow/Gold Ratio Signaling a Stock Market Crash?
Investors around the world are currently sitting on the edge of their seats, wondering what’s going to happen to the markets, i.e. stocks,
commodities, currencies, …
Last week, we already gave insight to our thoughts on the currency complex. This week, we want to highlight some of our brainwaves on the stocks/commodity markets.
As we are always comparing both asset classes, our most important
indicator to watch is the Dow/Gold ratio, which measures the purchasing
power of stocks versus gold.
A brief look at the Dow/Gold chart tells us that the ratio is on the
eve of forming a Death Cross, a formation which usually signals a sharp
and fierce decline. We already witnessed a simular event in the same
period last year.
On top of that, different momentum indicators, like the RSI or MACD
(see chart), are pointing towards a potential breakdown of the Dow/Gold
ratio near term.
A setback of the Dow/Gold ratio can be realised either by a rise of
gold, a correction of the Dow Jones index, or a combination of both.
Gold rising further from current levels is possible, but history
clearly shows the yellow metal suffers summer doldrums, which in the
current stage of the secular bull market usually means sideward price
action for the coming months.
A sharp decline for stocks seems more obvious, as investors await
more stimulus from the Fed, but probably won’t get their new dose of QE
immediately, which could lead to a sharp correction.
Furthermore, stock valuations are ballooned, pimped by unusual high profits and extreme margins!
With the steep rise of input costs, due to explosive commodity prices
over the recent months, investors could get very disappointed if their
high expectations aren’t met.
These are just a few risks which could trigger a stock market sell off…
So what can we expect if stocks start to tumble? If the Dow/Gold
ratio breaks down below 8x, we expect an acceleration on the downside,
with a first target being 7x, but probably dropping as low as 6x.
With gold hovering around the 1500-dollar-level, this would result
into a substantial market crash, with the Dow Jones dropping towards
9,000 points: a steep decline of almost 30 percent.
Be prepared to go ‘old school’ — Sell in May!
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Where Can I get access to the Dow Gold Ratio chart that I can manipulate (for free)?
Yeah the stock market and gold/silver prices doesn't base itself on fundamentals anymore, just what the FED says tomorrow.
It's all simple really...
There are 2 kinds of ZHers : traders and the others. Traders play with PM as they would with any other asset : short term profit à la JPM salad sprinkled with sweet&sour Chairsatan consommé.
The others, such as I, are annoyed by those parasites who are spreading the WS bullshit (ETF, SLV et all) to commodities which were never meant to create value but only to store it.
I buy physical to progressively step out of the system and to avoid supporting my own extorsion through inflation / taxes.
I dont give a fuck about silver loosing 5 or 10 bux in a day because i'm not gambling ; PMs will be my new money whenever i'll buy myself agrable land or a car. If the owner wants to be paid in fiat i'll just find another one who'll take real value in exchange for real assets.
When i feel like gambling I buy a lottery ticket, make stupid bets with friends or play a game of poker, i don't fuck other's people lives up through speculation and greed.
In other words : Fuck off and die traders, go spread your evil elsewhere.
Depends on Fed's words tomorrow.
I do not understand how company after company seems to be beating the expectations on earnings in this enviroment. UPS really surprised me. We are not buying anything and do not know many that are???
Costs have to be trimmed but fuel costs do not seem to be affecting much.??
Have you regularly used UPS or FedEx over the last year or so?
My cost of sending overnight packages has gone up about 70%. I'm really not impressed with junk, inflated FRN earnings. And I'm even less impressed with professionals that take this as a sign of strength.
About to go pick up some gold which has been stored for me. Does anyone have experience with the TSA? As far as I know it is only an issue with international transport.
i believe that any amount worth more than 5k dollars is subject to the drug trafficing moneylaundering regulations. (i used to have a copy of that laying around, try googling it, or ask a stock broker. they have incredibly tough rules on taking cash from clients)) whether they pick up on it or not, is another question. in electronic transfers, for instance, if you pay off your CC balance greater than 5K the regulatory agency can put a hold on the transaction. check the rules, and whatever you do don't advertise it.
one more thought, they just busted an NCAA point shaving ring in San Diego. they put the case together when one of the arrangers was caught about a year ago at the border checkpint at San Onofre with a suitcase full of cash, which he said he was taking to Vegas to pay a gambling debt. the FBI stayed on him, it took them a couple years to put it all together. they did not confiscate the cash, however, but they have other ways of making your life miserable. i would say have it transported legally, via a legitimate courier or even Fed Ex.
Dealing with TSA on domestic flights (101):
1. Carry as much gold and silver on the plane as you physically can.
2. Be polite, take your shoes off, etc.
3. When questioned about your precious metals, look at the TSA agent squarely in the eyes, scream wildly, "SILVER AND GOLD BITCHEZ!" while punching him/her solidly and directly in the nose.
4. At this point, the agent should respect your obvious superior intellect and let you proceed onto the plane.
Disclaimer: I haven't actually tried this, but it should work. Let me know
That was a hilarious answer. I'd add to it by saying it is extremely dumb to be taking more than $5000 of precious metals through TSA...they may or may not confiscate. After all the effort of buying the metal and storing it at home etc you would just take a 5%,10%,50% chance they confiscate or steal it?...why not drive?....or fly there and rent a car home? it sounds like a horrible plan as is.
If you're a member of the Power Elite, why not just take the G-5? There's no TSA at general aviation.
If you're a prole, I regret to inform you that you no longer have any rights when you travel via the airlines. It's automatically assumed that any prole that possess PMs has obtained them illegally or immorally and/or the necessary taxes have not been paid, so they're subject to confiscation. Damned money laundering proles!
The company would charge a lot to insure/ship it, so I will pick it up. Not driving across the country solo and female.
:-D !
Way to go!!!
Carry silver, crash TSA!!!
+1 LOL
TSA employs thieves:
http://www.infowars.com/tsa-workers-admit-to-stealing-huge-amounts-of-ca...
They spot your loot and have you step aside for a full grope or sexual assault while they pilfer your bags.
If given a choice, I'd prefer to take my chances with possible travel with an underwear bomber.
its time to travel in bath robes having forgone a bath in recent memory. " wanna see??" mr TSA man
"A brief look at the Dow/Gold chart tells us that the ratio is on the eve of forming a Death Cross"
Sorry but the chart shows a golden cross in February with both the 50 & 200 MAs now flat. Since they are flat there is nothing in the chart to suggest they are forming a Death Cross.
To state the obvious: If either gold or stocks were traded in a free market where pricing was determined by supply and demand and stocks and gold were investments instead of casino chips, then the average person could make rational decisions.
However, the prevalence of funny money fiat, financial innovation, bucket shop casino bets and straight-out planned market price fixing and manipulation make this both a more complex and rigged game.
IMHO, whatever T(banking empire)PTB decide to do with prices and currencies it will have virtually nothing to do with what is best for the real productive people of the world and only what they want for their grand designs.
yessssss. "like selling toothpaste." let me guess "you're one of the Flouridation People" too.
Exactly. Another reason to turn some more of you casino chips into real equity or physical coinage.
The problem is that "middle-men" or financial fuckers that add NO REAL VALUE to the real economy far outnumber the productive people now.
I still maintain that crashing the system is the only way compensation is going to find its way back to people who are actually worth a shit.
Crashing the system will transfer huge amounts of real assets from the bourgeoisie (that's us, BTW) to the Power Elites (or as you call them: "financial fuckers"). It's the PE that's crashing the system and they're doing it to accomplish the shearing that's done on a grand scale every century or so. There will be death and destruction on a grand scale. We and our families might not survive. The Rothschilds probably will survive and be even more powerful when this unpleasantness is over in a decade or so.
If you think this depression is going to be fun for the proles, you're blind and demented. We're not in Kansas anymore and this is not 1789 France either. This is 21st century computerized Stasi. The Stasi didn't work for the proles and the bourgeoisie and neither does DHS, BTW. They were there to keep order at the mutton stew pot that the financial fuckers that added no real value were feeding from.
People that are actually worth a shit are getting hammered first.
Summer market will probably lull itself to sleep in a range. GOld and silver will bebop up and down but grow slowly. Oil will be stressed for the rest of our natural lives.
Can kicking and political bullshit will continue.
I fully agree. The prevalent apocalyptic frame of mind of the (mainly) developed world, is just that, a mindset expressing the cultural anxiety of a (sector of) the planet living through sudden everlasting changes that seemed unthinkable during the triumphant neoliberal madness of just a decade ago. Historical processes take time, definitive, no-way-back time, but yes, time. Can kicking is (also) a (political, psychological and social) strategy that helps to cope, while adapting to new geopolitical and ecological realities.
Bullshit. Historical process that you know about take time. Supply line disruptions can cause very dramatic changes very quickly. Since they occur quickly, and often with few survivors, they rarely have been recorded in history. Numerous examples of societies that simply "vanished" and left behind evidence of chaos and horrific events.
I remain optimistic, but have seen the margins of my business collapse (thank God I had the foresight to secure certain commodities and equipment before the crisis) and at some point it becomes a no-win situation. There are physical laws the can not be avoided, period.
After reading through the Texas report yesterday, margin contraction due to rising input costs was reconfirmed. In looking at the markets, IMHO that fact is not priced in...yet.
After reading through the Texas report yesterday, margin contraction due to rising input costs was reconfirmed. In looking at the markets, IMHO that fact is not priced in...yet.
double post
Correct
the CNBC starry eyed rabbits simply cannot believe the Great Benny is talking (down) to his minions tomorrow in a Press Conference (we await with baited breathzzzzzzZ). Matters not that one CNBC guest after another is explaining King Bean will dodge all important questions and is 'skilled' like all central bwankers at their lips moving and their words being absolute worthless dross!
And of course nothing Benny the Bankrupt (he owns nothing but festering junk status US Treasuries and MBS's afterall) will be to help the common man or small-medium sized enterprises (the 2 sectors this parasite wants to bleed to be repaid)
Ignore Bennys empty oily words, his actions have been very simple to follow: print the fuk out of Benny Bucks and hand them to incompetent corrupt bankrupts on Wall Street and in Washington
Actions speak louder than words
Bennys Press Conference is another worthless junk show in a snowballing farce that has been rolling since 2007 ..nothing to see but another squirt of snake oil from a corrupt little crone
"A brief look at the Dow/Gold chart tells us that the ratio is on the eve of forming a Death Cross, a formation which usually signals a sharp and fierce decline. We already witnessed a simular event in the same period last year."
The "death cross" on the above chart from last year, at the end of May, was a terrible predictor. The drop was almost over (see a Dow chart. Not a real good trade)
it could happen. what we know HAS happened is "Libya and Fukushima" which "only ZH covers" and "with authority!" I'd like to call it "boring mainstream" but "boring mainstream doesn't care." Ms. Brennan continues to try and talk "something about interest rates in Greece, Ireland and Portugal" but lo and behold "it's smell the glove all the time, everytime" in that "mainstream world." This article while enjoyable would matter if it simply started with a fact or two. On the other hand..."young male gangs are known to go wilding on occassion, too."
I have updated DJIA price forecast to include positive ( short term) and negative ( deeper crash) effects of QE2:
http://www.saposjoint.net/Forum/viewtopic.php?f=14&t=2626&p=31988#p31988
Its coming, and very soon. Look in the link, there is a chart with dates and prices. Normal in a way after first rebound after crisis ( see 1929, of course, this time is different, it will not be as deep, but deep it will be) .
Nice link and analysis, ivars. Hat tip, - ST.
I have updated DJIA price forecast to include positive ( short term) and negative ( deeper crash) effects of QE2:
http://www.saposjoint.net/Forum/viewtopic.php?f=14&t=2626&p=31988#p31988
Its coming, and very soon. Look in the link, there is a chart with dates and prices. Normal in a way after first rebound after crisis ( see 1929, of course, this time is different, it will not be as deep, but deep it will be) .
I don't know about the Dow/Gold ratio, but oil and gas are getting dangerously close to the crash threshold of 2008. (Of course, oil/gas are moving higher for the same reason as gold/silver, so it's probably 6 of one, half a dozen of the other).
Notice the relative lack of industrial IPOs after a nice equity run.
The money is not made in brick and mortal value add business enterprises.
It appears to be quick momentum trading, and slick margin spread takeaways derived from the money cartels giveaways to the banksters.
You mean finite resources and resource depletion?
I don't know about the Dow/Gold ratio, but oil and gas are getting dangerously close to the crash threshold of 2008. (Of course, oil/gas are moving higher for the same reason as gold/silver, so it's probably 6 of one, half a dozen of the other).
Equity markets are built today as a house of cards.
Humpty Dumb---ty.
That's the simple wisdom of a kindergarten schoolchild. And we are getting close to the great fall. How will the King's horses and all the King's men put it together again, this next time?
For those newbies around here.
People here don't want to hear the other possibility,
As always know your ability to handle pain, this market isn't for the Elmer Fudd's looking for a quick buck.If you want to know what can happen look at Silver from 2007 to early 2009. If you can handle that fill yer boots. Yesterday shows how you can have your head handed to you if you are in at the correct times.
Pick your stops and pull the trigger, half the schills around here now don't even own physical, they most likely are trading the ETF's with no skin in the game.They post troll crap on people who try to be honest in their opinions.
Just be careful, typically one sells into the rise, you don't buy the rise. Or you hold to sell into the future. But be disciplined. The schills are everywhere these days. Pick your targets and pull the trigger when you hit them.
Just saying.
One more thing, the fact that there are few comments means silver is in fact a sell and gold the trade.
Soon enough the stupids will be running back to the gold forums.
That's why I sold soem tradeable silver (not my core position) at the open yesterday and bought gold later int eh day on the dip, you can smell the bloodshed.
That's why I sold soem tradeable silver (not my core position) at the open yesterday and bought gold later int eh day...
"buying" and "selling" intrinsically valuable coinage seems like waste of energy in that nothing of value is created in the exercise. I blame the government for fostering this sick predicament we find ourselves in.
I get that the individual's "profitable" trade is silver into gold at current Ag:Au levels, but if the US treasury would step up to the plate and cut the middleman fed out of the circuit and issue US legal tender notes instead of paying tribute via timmy bill paper, we could get on with Productive transactions.
This isn't rocket science!
Pick your stops and pull the trigger, half the schills around here now don't even own physical, they most likely are trading the ETF's with no skin in the game.They post troll crap on people who try to be honest in their opinions.
I agree. The problem is that I truly believe there are more speculators playing the ETF game and short term trading then are actually buying physical to prepare for the end game. This fucks me because as a regular buyer, they are just jacking up the price on me. That being said, this will revert and I can't wait for the day when the speculators get washed out and I can buy more much cheaper...
Owning physical silver since it was 10 bucks an ounce means I don't give a flying fuck what happens on the market till it goes below the cost I paid for it. Somehow, I don't see that happening anytime in the near future. Even if it does, not a single fuck will be given here because I will still be prepared for the zombie / werewolf Apocalypse. Holding physical means no matter what happens on the market, I still have my asset within reach and not a number on a sheet of paper.
"Pick your stops and pull the trigger, half the schills around here now don't even own physical, they most likely are trading the ETF's with no skin in the game.They post troll crap on people who try to be honest in their opinions."
The only advice you need. Do your own homework and don't let your emotion weigh in at all. The MSM media has to make it all sound complicated in order to justify their own existence. The underlying problem(s) across the board is too many middle-men that are not worth shit and add no real value to the economy. The lack of leadership in many spheres of society certainly isn't helping but most of everything that is happing has happened before at several points throughout history. It is what it is, prepare yourself and you own community for what is coming and you will be fine.
+10
LOP well said
1+
Newbie here. I started reading ZH in Aug. 2010, and have kept reading, not so much for the 'answers', but because peoples here seem to ask the most interesting questions.
As a result my little handful of beans has increased modestly, but more importantly, the beans are now arranged differently, so as to take better advantage of whatever may come. Hat tip to the forum.
Good just take your time, accumulate as you can on the dips and soon you'll have a tradeable potion for times like this to make your core position free.
Buying gold instead of taking cash seems to be reasonable play here as the parabolic silver run made the silver gold ration screwed up. So I did what seemed logical and sold the rise and bought the gold.
Only time will tell whether I am right. But at least it's my call. Unlike everyone here who beats the drum of buy and hold.
You gotta be nuts IMHO. The sharks are eveywhere and this trade got way out of hand.
My family have bought for generations and they always said when everyone is right on silver and gold
sell...
As of today I'd say they were right. Hopefully the schills got slaughtered. Somehow I doubt it.