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Dear
Friends please come closure and learn about The Dow-Gold ratio:
"In short, all market sectors are cyclical. The gold and silver cycle essentially started back at the end of 1999. In my opinion, the way to think about think about investing is not in dollar terms (ie., how much investments go up in dollar terms), but rather to think in terms of comparative terms (ie., how much something is worth relative to something else).
Are you looking to sell scrap gold and silver and other precious metals
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One of the most effective ways to price gold & silver bullion is in terms of the Dow Jones Industrial Average (DJIA or the Dow). In other words, if you put a $ sign in front of the Dow, how many ounces of gold does it take to buy 1 share of the Dow. For example, at the February 29 close, the Dow was at 12,266.39 and the gold price was $947.70 per ounce (I obtained this data from Kitco.com). Thus, the Dow-Gold ratio is currently at 12.58 (12,266.39/975.10 = 12.58); it currently takes about 12 and a half ounces of gold to buy 1 share of the Dow.
Refer to the following chart, which graphs the Dow-Gold ratio from 1900 to 2004:
http://chartsrus.com/chart.php?image=http://www.sharelynx.com/chartsfixed/dowgold1900.gif
As you can see, the chart shows a very apparent relationship between the Dow and the gold price. You will notice that the Dow topped out 1929 (right before the market crash) at about 18 to 1 and bottom out around 1933 at around 1.5 to 1. From about 1933 to 1943, gold and the Dow traded at roughly equally. From 1943 to 1966, the Dow outperformed gold and topped out at about 27 to 1. From 1966 to 1980, gold outperformed the Dow and for a day, both the Dow and the Gold equaled 850 (1-to-1 ratio). For the next 19 years, the Dow outperformed gold and topped out at 44 to 1 in 1999. For the past 8 years, gold has outperformed the Dow. At the end of this chart (in 2004), the Dow-Gold ratio is at about 23 to 1. It is my belief that the Dow-Gold ratio will end at the end of this gold cycle at .5 (a half of an ounce of gold will buy 1 share of the Dow.
Here's another chart of the Dow-Gold ratio from 1998 to today so you can see the ratio charted after 2004:
http://disciplinedinvesting.blogspot.com/2008/02/dowgold-ratio-what-ratio-might-be.html
Historically, when gold is in a cyclical bull market, silver follows stronger. Again, let's look at comparative prices, this time the silver-gold ratio (how many ounces of silver buy an ounce of gold). At the top of the last gold bull market in 1980, the gold-silver ratio topped out at about 16.7 (ie., it took about 16.7 ounces of silver to buy 1 ounce of gold). See the following chart from 1975 to today:
http://www.goldmoney.com/en/commentary/2008-02-10.html
As James Turk, the founder of GoldMoney, describes in the above link, the gold-silver ratio bottomed out at 101.8 oz in February 1991 (close to the middle of the last gold & silver bear market). At the present, the gold-silver ratio is 49.22 ($975.10 per gold oz divided $19.81 per silver oz; 975.10/19.81 = 49.22). Just as I believe the Dow-gold ratio will top out in this cycle at .5 (versus 1 in 1980 and 1.5 in 1933), I believe that the silver price will at least equal 12 at the end of this bull cycle.
So, all that said, I think the key is to own both
gold and silver bullion and have a preference towards silver bullion (I typically suggest about a 60% silver /40% gold split for all funds held in silver and gold bullion). How do you know when to sell your gold and silver metal? My suggestion is focus solely on the Dow - gold ratio. More specifically, when the Dow-gold ratio equals about 3, I would suggest selling about 25% of all gold and silver held in weight terms (ie., if you're holding 100oz of gold and 100oz of silver, sell 25 oz of both gold and silver), when the Dow-gold ratio equals about 2, I suggest selling another 25% (ie., using the same example, selling 25 more oz of both gold and silver) , at 1, another 40% (this leaves you with 10%, using the same example, 10oz of gold and silver left) and sell 5% when the ratio hits .5 (this leaves you with 5% of your originally purchased gold and silver, which I suggest holding onto as a portfolio balance for the next cycle). This, in my opinion, draws out a very safe, calculated strategy to benefit from the current gold & silver bull market.
I believe that purchasing about 5-10% of one's gold and silver in the form of American eagles and storing them in a safety deposit box NOT at a bank (the reason for this is that if the bank does under, all of your items stored at the bank will go under with them; there is a common perception that you own items stored in a bank safety box; this is not true). As for the remainder of the allocation, I suggest storing at GoldMoney. With GoldMoney, you hold title to your metal (unlike a bank or brokerage company, which is why you have insurance on your bank deposits and securities held in a brokerage account). All the metal is redundantly protected through an insurance policy underwritten by Lloyd's of London and we are audited (both financial and operational audits) by Deloitte & Touche. If GoldMoney were to stop operating for any reason, your gold and silver would be sent back to you (we have a pre-paid for arrangement with a trust company to perform this procedure). GoldMoney a
lso offers a patented payment feature, allowing you to pay others with gold and silver electronically (later this year, users will also be able to pay one another with national currencies such as US dollars, euros, British pounds and Canadian dollars). I believe this feature will become extremely important should the credit risk currently embroiling the banking system affect the ability for people to use their bank accounts to send and receive payments."
The following links will Waive storage fees for 6 months, as a gift to you and an incentive to open a GoldMoney account and protect your money against hyper-inflation and deflation in today's unstable times and to take advantage of the ONCE in a LIFETIME Bull Market in Gold:
Freedom:
http://goldmoney.com/?gmrefcode=freedom
Friends:
http://goldmoney.com/?gmrefcode=friends
Yours in best wishes during this once-in-a-lifetime Gold
Bull Market:
Michael E. Nelson
Economist
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