Dow / Gold Ratio Drops to 9

Timing is everything sometimes. Since our little series on currency, gold has taken off like a shot, topping $1165 an ounce today.  The Dow hasn't been sleeping though this uptrend, moving up to 10450 today.  However, the Dow / Gold ratio has now dropped from 10 to 9 in a matter of one month.

Experts continue to tell us that the dollar will remain weak as long as the Fed continues its stimulus plan of low interest rates and printing currency.  The health care vote in the Senate this past weekend spurred gold into the latest uptrend as worries about where the money (~$1 trillion) to pay for the bill has yet to be debated.

Experts also tell us that the weakness in the dollar will turn when the Fed tightens money policy and the economy turns around.  However, when pressed for an answer on when that will occur, those experts have been hemming and hawing.  In fact no one in the government has stepped forward to even venture a guess.  In other words, the dollar will remain weak and there is no solution in sight on if or when it will strengthen again.

The gold bugs say that gold should move to $1300 with relative ease unless the government makes a policy shift.  That should push the Dow / Gold ratio down to 8 or less by spring 2010.  Commodity-based stocks should also perform well during this time frame.