Buy Gold, Sell the Dow Jones: Still the Trade of the Decade

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Yesterday, the Dow dropped another 237 points. Gold held steady. The unstoppable force of inflation seemed to slow down. The immovable object of deflation didn’t budge.

And what of our ‘Trade of the Decade?’ “Sell stocks; buy gold,” we said. That was when stocks had hit an all-time high…and gold had hit something close to an all-time low. At the end of the 20th century, it took 43 ounces of gold to buy the Dow stocks.

Well, as of yesterday, you could have bought the Dow for only 15 ounces.

So far, so good. We expect that we will eventually see the Dow and gold back on equal speaking terms – one to one…or close to it. So, we’ll hold our trade until the end of the decade. Let’s see what happens. The Dow could easily lose 30% – taking it down to 8,000…or maybe as low as 5,000.

Could gold ever sell for US$5,000? Well, we don’t know…but hold onto your hats. Fasten your seat belts. Inflation and deflation still appear to be on collision course. The ride could be bumpy…and we’re holding on to the yellow metal, just in case.

Bill Bonner
The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
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Comments

  1. who bothers with the DJIA unless your keeping track of the stupid derivative market.

    i’d go the S&P route if your looking for a potential stock pick to survive the coming credit crunch….

    blah, blah, blah… do your homework and remember to get all your fundamentals together before looking at the charts!

    lots of people like gold as a store of value, otherwise it’s more of a precious metal and expensive industrial item.

    Reply

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