This week we will conclude our chart analysis for 2024 by looking at a long-term combo chart with the quarterly Dow/Gold ratio at the top and the gold price at the bottom.
We can quickly see that the ratio is currently trading near a historically significant level near the 1929 peak. We can see that the ratio has crossed this level three times in history. Each time, a spectacular fall followed, with a drop of 87% after 1929, 92% between 1972 and 1980, and 59% between 2007 and 2011. This led to exceptional increases in the price of gold , with increases of 75% (following government revaluation), x19 and x2.5, respectively.
Not only is the ratio trading below its 1929 level again, but it is also breaking the top of an extremely wide wedge that began to form during gold’s secular low in 2001. The fact falling below such a broad technical pattern, combined with the loss of this historically important level, could well mean the ratio is poised for its fourth steep decline in the last 100 years. If so, precedent indicates that gold at $4,500 is a lock, and a 10x increase from that level is not unimaginable!
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The information contained in this article is purely informative and does not constitute investment advice, nor a recommendation to buy or sell.
