The 55% Decrease in the Value of the Dow Jones Industrial Average
Thursday, April 19th, 2007
By Michael Lombardi, MBA for Profit Confidential
Here’s something you might read anywhere else:
The world’s most widely followed stock market index is obviously the Dow Jones Industrial, often just referred to by market commentators as the DOW. This index is a weighted average of 30 of the largest companies in the world. Today, the DOW sits at about its record high.
And here’s something you probably won’t come across:
But, if we measure the value of the DOW in after-inflation dollars, the DOW is still well below what it traded for in 1999 — eight long years ago. We can also look at the DOW in a couple of other ways.
If the DOW is measured in euros, not dollars, it is trading well below its 1999 high. The picture gets more dramatic if the DOW is measured in gold bullion.
Only five years ago, back in early 2002, when the gold bullion bull market started, it would take approximately 40 ounces of gold bullion to equal the value of the DOW. Today, at gold’s current price, it would take approximately 18 ounces of gold to equal the value of the DOW. In other words, if we measure the DOW in gold bullion, and not in U.S. dollars, the DOW is down 55% over the past five years.
The depreciation of the DOW in gold bullion currency is startling. Unfortunately, very few retail investors are aware of the bull market in gold bullion and the severe erosion of the DOW in paper dollars.
In 2003, I made a bold forecast that, at some point ahead, the value of one ounce of gold bullion would be equal to the value of the DOW. I’m getting close to the fruition of that prediction — and I am quite happy to stick by it today.
Next Post: This Market May Have a Lot More Upside to Go
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Tags: bull market, gold, stock market
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
