Monday, November 24, 2008

*** GOLD *** why it is important .... HOW MUCH IT HAS GAINED on the DOW the past DECADE ... A LESSON

Gold never really gains Value or loses much value except in nominal terms .... an OUNCE has pretty much bought the same amounts of OIL WHEAT CORN ETC for over a hundred years and taking OIL out hundreds of years on other commodities...


ONE MUST REALIZE we have a FIAT CURRANCY and it will ALWAYS BE IN INFLATION ( A GRADUAL STEALTH TAX ON THE PEOPLE )


SO even though the DOW might APPEAR to be going up... sometimes I DARESAY its ONLY AN ILLUSION AND INFLATION...
besides BUBBLES( which ALWAYS BUST )and sometimes true ecdonomic growth ...

The last Decade was merely a Bubble of Credit and not true growth ....

GOLD IS ONLY a STORE of WEALTH not a way to make money ... it does PRESERVE your wealth in bad economic times though and allows you to come out on the other side able to use your wealth to make real economic gains once again...

The only important number in the DOW becuase of INFLATION
is the DOW priced in OUNCES of GOLD ....
or how many OUNCES of GOLD it takes to buy the DOW...

The DOW has been SLIPPING AGAINST GOLD FOR 10 years and SEEMS MORE THAN LIKELY on a path to CONVERGE at 1 ounce of gold buying 1 unit of the DOW


Take a look at this graph to see the decline

http://4.bp.blogspot.com/_sy2qqBjcPIg/SJNIRuwkoPI/AAAAAAAAArU/wZ8WBJ2QaXQ/s1600-h/DOW_In_Gold.png

in 1999 it took 45 ounces of GOLD to buy a unit of the DJIA (DOW)


1999 - 45 ounces
2001 - 42 ounces
2003 - 25 ounces
2005 - 25 ounces
2007 - 20 ounces
2008 - 12.5 ounces in AUGUST this year
PRESENT NOW - ABOUT 10 ounces of Gold will buy the DOW TODAY

I SAY it will converge at 1 ounce of gold buying 1 unit of the DOw in next few years could be as soon as next year ...

so price of DOW doesnt matter doesnt matter if it 100,000 .... all that matters is how many ounces of gold will buy that 100,000 .... and Im telling you if the dow was that hypothetical 100,000 in when gold and dow converge
that 1 ounce of gold will be 100,000 and ....

that will not mean gold made money it will mean gold preserved purchasing power during hyper inflation

- ryan renshaw

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