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

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
Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.
Bill Bonner

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1 Comment on "Buy Gold, Sell the Dow Jones: Still the Trade of the Decade"

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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.

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