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November 4, 2008

Will stocks disfavor an all left-wing administration as it relates to gold diversification?


"If a president and the Senate and the Congress are all dominated by one political party, the odds are that many new government regulations will be passed. The market prefers a president and Congress with opposing parties on the thesis that the fewer regulations that are passed, the less government there will be to interfere with the free markets. In other words, the less government, the better the markets like it.

Remember this one, 'I'm from the government, and I'm here to help you.' Answer -- 'Do me a favor, don't help me.'"

"Dow/gold ratio -- Back in July, 1999, one share of the Dow would buy a big 44 ounces of gold. When the ratio dropped below the rising red trendline, the equation reversed in favor of gold. Today, one share of the Dow will buy only 12.8 ounces of gold. The ratio is saying, own gold, not the Dow. I expect the some day in the future the ratio will again drop down to the 2 (green) level shown on the chart. At what price might the Dow and gold cross? How about 3,000?"

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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