Gold vs. DOW; Looking to History for Help

Was reading about China crashing stock market and got looking into the drop during Great Depression. Then was looking at entire history of DOW value. Then came across this interesting chart which compares DOW value to Gold value. Since gold has a real value vs. fake money it's interesting to see the correlation between the two. Only two conclusions to be made from this: stock market is over valued or gold is undervalued. The way things are going I would be willing to bet that the stock market is over valued and due for a drop, big drop. At the same time gold is a bit anemic and could stand to rebound to 1300-1500 range. Thoughts?

In 1980 a fiend and I was looking at gold prices dropping, we thought it would be a good investment. I asked my oldest uncle who I thought was a financial genius, he told me no, buy silver much more stable. At my insistence, based only on history and events I persisted, my uncle finally gave me the name of a gold broker. I was in my early 20's then, not a lot of money to spare and my uncle kept telling me no, no about gold. I only bought 3 ounces, listening to my uncle and not selling that 3 ounces in 2000, rank up there with the stupid things I have done. That 3 ounces is the only gold I have, besides the two gold crowns in my mouth, yes I been buying silver ever since 1980!

I'm not into it at present, but i've done okay with gold & silver over the years. As much as anything it's a commodity like corn or pork bellies. The trick is to know as much as you can about the thing you're buying into before jumping in.

Memory is vague but back in the mid 1970's i think i bought gold at around 325.00/oz. Silver was running around 4.00$/oz. ?

Anyway ... at the peak of the recession 1979 -1980 i sold gold at 925.00 & silver at 43.00$/oz. The main reason that silver did so well was that the Hunt bros were manipulating the market. ( They were later tried,convicted, and punished for the offense.)

You would have to go back on the historical gold charts but i think it peaked at around 1000.00$/oz sometime in 80 or 81 ?

If you adjust for currency inflation .... gold today is grossly undervalued from it's peak. There isn't as much demand either as an industrial material -or- a hard currency insurance policy against economic collapse.

If there's more money to be made on an investment in the Dow that's where people living off their investments put their money. If things start getting flakey with the Dow, they flock to the safe haven of gold & silver. The increased demand drives the prices of precious metals higher.

In short: The Dow and the hard currencies are inversely proportional to one another.

I looked into gold prices and still think that buying land is the best way to make money in the long term.
In the late 1960's the price of gold was US$30 a ounce. 1967 I think. The price of gold was set in value, it didn't change at all.
But a house cost $4000, in Queenstown $10,000. In 1985 that same house was sold for ,$250,000. Gold was $300 a ounce then.
But in the meantime the house paid for itself and while the profit in income is taxed, yes you make a profit every week, the house value rise is not taxed.
Gold profits are taxed only when you sell and make no profit until you sell.
I got my house at a real cheap price, its been valued at ten times what I paid, right now its 7 times what I paid for it 17 years ago. In 17 years I have paid more than the value in rates though, though rates are a service everyone pays for in a way.
Gold, short term profits, or 'hedging' a bet.
Property, short term if you know what you are getting into. Long term always a winner. You need two ppropertys to make a property profit. Though you don't need to only have two, 'another one' is just 'one' more as its playing for itself after you own two. Starting with your investment $ and that's only 10% of your first property anyway.

Yep, I wish I would have bought good farmland around here when it was down below a grand an acre. But of course a person would have had to have free resources to do such a move and usually my family has not. Also, farmland usually can't be bought in small pieces at a time like gold and silver but in larger parcels (20, 40, 80, 160, etc. acres) so that drives up the cost considerably. All my rural relatives are millionaires, at least on paper but in reality everyday living are not because the land would have to be sold which generally isn't going to happen. Then for the old timers, and even someone my age perhaps, there would be capital gains to pay in taxes if a person bought real cheap compared to the prices now. The good thing about farmland is that if a person doesn't farm it themselves it still makes money for you by renting it out. There's a lot of little old ladies in South Dakota who's income is mostly farmland rental checks...

Very well said olddude, why it's good to reference history, as a scale and history does repeat itself, if only we would remember that!

X2 Old Gent .... very good perspective on the value of gold.

It might sound weird but i don't see PM's as being an investment that yields an annual return but rather an insurance policy against bad things happening. If the fiat paper becomes worthless gold is still an excellent currency.

Even more important .... It's portable wealth.

Let's say that you were a Christian living in Syria. ISIS is about 40 miles away and moving in your direction. It doesn't matter how much property you own in town. You better get out of Dodge FAST ! You gather up your family, your bug out bag, your gold coins, and make a bee line for the border.

With most of your (gold) wealth still intact there's a hope of being able to set up a new life for yourself in another country. (The alternative would be to end up destitute & helpless in a refugee camp somewhere completely dependent on the goodwill of others.)

Another scenario: Most of the German Jews that had any kind of foresight got out of pre-WW2 Germany with their wealth mostly intact. Many of those without foresight- or- the means to leave died in the death camps.

Another scenario: The Great depression and the dirty thirties when the dust bowl destroyed over 100 million acres of farmland. Thousands of destitute farm families with no wealth but worthless land forced to migrate to greener pastures.

Disasters come in all shapes & sizes. You may not always see them coming but having some portable wealth can help get you through the rough times.

https://en.wikipedia.org/wiki/Histor...strial_Average

Go look at what companies were included in the DOW over time and you will see industries rise and crash and something new taking over. Now ask yourself what new industries are rising in the US (nothing) and what companies are just buying up competition so they can quit innovating (everyone)? What will drive the DOW up now that there is no growth in mature industries? All we have is the cyclical value tied to the economy going up and down (sales) nothing more.

What you need to think about is not the value of gold or DOW, but how will YOU make any money in the future economy where labor is minimum wage and there are few jobs for college educated people or money to start new business.