Investing in Undervalued Stocks

Dow to Gold Ratio (Chart) - How Much Are All the Dow Jones Companies Worth Expressed in Gold

One of the methods investors can use to help to determine the future price of gold is the Dow to Gold ratio. The Dow to Gold ratio looks at how many ounces of gold it takes to purchase all the companies in the Dow Jones index, assuming every point in the index represents one dollar.

If you are interested in my thoughts as to where I believe the Dow to Gold ratio will go to, I recommend you to read the note at the bottom of the page.

Dow to Gold Ratio (Chart)

As you can see in the Dow to Gold ratio chart above1 there are periods in recent history where investors have lost confidence in paper assets. These periods come shortly after the performance of the Dow Jones index has peaked and are referred to as a financial crisis. Looking at the chart, it seems that at the end of every financial crisis the Dow to Gold ratio comes down to between 2.9 and 1.4 to 1.

How to Calculate Today's Dow to Gold Ratio Yourself

In the following widget from LiveCharts.co.uk you will find real time market data for the Dow Jones index and the gold price:

You can calculate today's Dow to Gold ratio yourself by dividing the value of Dow Jones index by the value of the gold price and with the outcome there are two possible conclusions:

  1. The price of the Dow is too high, or
  2. The price of Gold is too low.


If you would like to be the first to be informed when I add new content to UndervaluedEquity.com, please leave your details in the name grab form on the Support page!

You can also support me directly by clicking on the advertisements that appeal to you, or by making a voluntarily donation with Paypal.

Your support helps me to speed up the process of adding great, free content to UndervaluedEquity.com!


Note: In today’s world governments and central banks do anything in their power in order to prevent the total collapse of the economy. Therefore I must conclude that we are in the midst of a financial crisis! This means that the price of the Dow is too high or that the price of Gold is too low. As with all things in life: the truth lies somewhere in the middle. I believe that the Dow Jones index will come down and that the price of gold will go up. Eventually, I believe the Dow to Gold ratio will come down to between 3:1 and 1:1.


What Type of Content Can You Expect to Find on UndervaluedEquity.com

Main Section  Description 
News (RSS)  Today's News Related to the Global Energy and Mining Stocks. On this page a RSS feed is displayed with stock market news related to the energy and mining sectors. You can subscribe to this free RSS feed too! 
My Due Diligence  How I Conduct My Stock's Due Diligence Investigation Process. If you want to know what I learned while I was conducting my due diligence, I recommend you to read all the chapters of the investigation process. 
My Stock Watchlist  Are These the Best Stocks to Buy Today. In my stock watchlist you find stocks who offer great potential, but at the time I analysed these stocks they didn't comply with all my guidelines from my due diligence chapters. 
My Stock Portfolio 

Are These the Best Shares to Buy Now. As the year 2015 has just started, I believe it's about time that I share my stock portfolio with you. Therefore, you will find my updated stock portfolio on this page. 



comments powered by Disqus


1 Source: http://simplycharts.files.wordpress.com/2007/03/dowgoldratio2006.jpg

About Jeroen Snoeks

Jeroen Snoeks - UndervaluedEquity.com

Jeroen Snoeks is the founder of UndervaluedEquity.com, a website for investors passionate about investing in undervalued stocks. Through UndervaluedEquity.com, he shares his experience and knowledge and will soon reveal his personal stock portfolio.

  Positive SSL Transparant Background