Thursday, February 7, 2013

Nikkei 225 versus Gold Comparison: Gold Up 300% in 12 Years


In reference to my recent blog post: He Who Laughs Last, Laughs Best! Dow at 14,000 and People Laugh About the Gold Price? Where it was pointed out that, compared to gold (and silver) prices, the Dow at 14,000 in 2013 is actually down OVER 57% compared to the Dow at 14,000 in 2007:

"...what does Gold tell us about the recovery of the top in the DOW? 

In 2007 it took 20 ounces of Gold to buy 1 stock in the Dow index. 

In 2013 it only takes 8.3 ounces of Gold to by 1 stock in the Dow index. 





The Dow is off 58% from its 2007 high in terms of Gold. 

What does Silver tell us? 

In 2007 it took 1056 ounces of Silver to buy 1 stock in the Dow index. 

In 2013 it only takes 439 ounces of Silver to by 1 stock in the Dow index. 

The Dow is off 58% from its 2007 high in terms of Silver."  


... I was getting read to write the same post, excepting this time I was going to compare Japan's Nikkei stock index with the gold prices. Thankfully for my poor math skills, Mr. Nobody has come to the rescue and sent along this article that does my work for me.

Mr. Nobody (thanks!) wrote:

Hello Mike,  I found an article that I hope that might be of some interested to you. 

When priced in gold, it talks about how both the Nikkei and DJIA are in long term bear markets.  It's amazing, when looking at the Nikkei in gold, it has done nothing in 30+ years! The DJIA is following the same trend, just lagging by a decade or so!  

http://static.safehaven.com/authors/brochert/20734.png  (Nikkei in red/black)  

http://pricedingold.com/charts/DJIA-1985.png  (DJIA in blue)  

I will ask the obvious. If the Nikkei has done essentially nothing for 30+ years, with the DJIA has done nothing for 20+ years, what do you think the DJIA will do in the next decade?   

Where do we go from here? 

Well, I know where I go! I go to the link he so graciously sent.

Japan versus USA: Same Depression With a Lag 


Speaking of Japan, do you realize that we are on a similar course when stock markets are priced in Gold? I am not saying deflation of inflation, I am saying "priced in Gold." Only Gold bulls are used to such pricing strategies, but it is time for reality to intrude on the paperbug world.

Whatever monetary chaos we are in store for, Gold will outperform stocks over the next several years. This is open for debate in my mind as much as the question of whether fiat money will retain its value over the next decade is open for debate. Believe what you will.

But notice the "phase shift" chart message between Japan and the USA shown below. The chart is a monthly log scale chart of the Nikkei stock index ($NIKK, the main Japanese stock index) divided by the price of Gold ($NIKK:$GOLD), shown in a black and red candlestick format, versus the Dow to Gold ratio ($INDU:$GOLD), shown in a black line format:


Thanks to Mr. Nobody for the hot tip!

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