The record high in the Dow, touted by the talking heads, is in fiat dollar terms. In terms of real money – gold – the Dow is still 65% below it’s 1999 high.

by James Quinn
You won’t get this prospective from the shills and shysters on CNBC. The record high in the Dow, touted by the talking heads, is in fiat dollar terms. In terms of real money – gold – the Dow is still 65% below it’s 1999 high. And that is after a huge rally from the 2009 lows. With stock valuations at record highs and gold having fallen 37% from its 2011 high, do you really think the Dow has a snowball’s chance in hell of even coming close to its all-time high. Not bloody likely.

For some perspective on the long-term performance of the stock market, today’s chart presents the Dow priced in another global currency — gold. Today’s chart illustrates how it currently takes a touch more than 15 ounces of gold to ‘buy the Dow’ (i.e. the Dow / gold ratio) — well off the 44.8 ounces it took back at its peak in 1999. From the 1999 peak until 2011, the Dow (priced in gold) endured a massive bear market. Since 2011, gold has struggled while the Dow has continued to rally. All of this has resulted in the Dow (priced in gold) rallying in a well-defined, upward sloping trend channel. Despite this strong rally, however, the Dow (priced in gold) remains well below its 1999 peak.

image: http://www.chartoftheday.com/20150325.gif
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