Wednesday, February 13, 2008

Gold Goes Mainstream-2

"The [Fed] ... [has] been increasing the money supply at a much faster rate than people realize, near a 15% annual rate of increase in M3. ... We are going to have an even more narrowed and focused market than we had last year. Something the world is going to want now is a currency alternative. An investment I have felt positive about but now feel dramatically more positive about is gold. Gold is probably the single most important investment that most of us can have a representation in. ... At most tops in gold, gold and the [DJIA] sell at the same price. Right now, gold is about one-fourteenth the price of the Dow. ... I would rather own the Chinese currency than the U.S. currency. Another area that is significant and that we must pay some attention to is agriculture, beacause worldwide demand for food is going up", Sandra Ward interviewing Joseph McNay of Essex Investment Management at Barron's, 4 February 2008.

In 1933 the DJIA got down to 41 with gold at $20.67, a 2 to 1 ratio, in 1980, gold got to $875 with the DJIA at 889 a 1 to 1 ratio. Three to one gold would put it over $4,000. Gold looks cheap to me. Also see my 24 December 2007 post.

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