Replies to post #179371 on Fortress Financial Group fka FFGO

[Irrational Exuberance]

http://www.fortfinancegroup.com/gold.html

... Which is exactly what FFGO said they are waiting for as well.

In the long term, gold has proven to be very stable. The value of gold as a purchasing power, distinct from the purchase power of the dollar for example, still remains very much the same or better.

If you look back you will find that one ounce of pure gold has hardly changed at all. One ounce now still purchases the same as it did 200 years ago. However the change in paper currency, due to inflation and removal of the gold backing from currencies world wide, has been dramatic and can be shown by the consumer price index. One ounce of gold still purchases today what it did 200 years ago. In fact it is tending to purchase more.

It is likely that this scenario will continue. Inflation, recession etc. will continue as more paper money is printed. Yet the value of gold will remain the same in terms of purchasing power. Historically, gold has been the asset of choice for people who lose faith in their currency.Gold and the dollar have had a seesaw relationship since the 1970s, when currency prices were first allowed to float. When one rises in value, the other tends to fall. Owning gold is increasingly seen as a hedge against the hazards that come with holding the dollar, the world’s reserve currency.

Dow vs Gold


There are various tools investors can use to help determine the future price of gold. One of the primary methods used is the Dow Jones versus Gold ratio. This ratio looks at how many ounces of gold it takes to purchase the Dow, assuming every point in the index represents a dollar. This ratio also reflects the market's confidence in paper versus physical assets like gold.

There are certain points in time the gold and the Dow trade at a 1:1 or a 2:1 ratio, where one or two ounces of gold can purchase the Dow. When this happens gold has reached its peak in terms of purchasing power relative to other assets. These are periods where investors have lost confidence in paper assets, and we believe we are approaching this ratio again.

The number of ounces it takes to buy the Dow is now less than half. We believe this ratio will once again be 2:1.