Wednesday, June 16, 2010

If Gold Hits $3,000...

...the Dow will hit 5,000, according to David Rosenberg:
In his Tuesday morning report, Mr. Rosenberg plugged the value of gold versus the level of the Dow Jones over a period stretching from 1900 to the present day, and found two historical low points: just after 1930, and 1980.

The current decline in markets coupled with the run-up in gold is approaching the same nadir, but is not quite there yet.

“If this ratio ends up retesting the two fundamental lows that it has achieved in the past … what we would be talking about here is a Dow 5,000 trough at some point down the road,” he said.

That's quite a forecast. For trivia's sake: when the gold bull market ended in January of '80, the Dow and the gold price briefly crossed.

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