There has been a lot of talk recently that a stock market crash is imminent. If this prediction does hold true, one has to wonder what will become of their investments.
The current monetary problems that plague the world have investors on shaking in their shoes. At any time you could see the Dow drop to level’s that have not been seen for decades.
So, how can you protect yourself against a sudden Stock Market crash?
Throughout history it’s been proven that when the stock market is in trouble, the price of gold increases. There is an indicator called the Dow vs gold price ratio that shows this scenario.
The Dow Jones vs gold price ratio measures how many ounces of gold it would take to purchase the Dow, assuming that each point in the Dow is equal to one dollar.
Throughout history there have been several instances where this ratio came to within 1:1 or 2:1, meaning it would take about one or two ounces of gold to purchase the Dow.
In 1896 it was 1.28:1, in 1932 it dropped to 2.97:1 and the most recent time the Dow vs gold ratio came close was in 1980 when it was 1.33:1. At the time of this article it is about 7:1, down from it’s all time high of 41:1 back in 1999.
Many analysts are predicting we will see it close to within 1:1 or 2:1 once again in the very near future. For that to occur either the stock market will have to have a major crash, the price of gold will have to rise considerably or some of both.
According to predictions, it is possible that we’ll see gold rise to $5000 an ounce or higher. On the other hand, with the state of the U.S. Dollar, and other worldwide monetary problems, a stock market crash is more likely.
So, if we do experience a Stock Market crash, how can you protect your investments without selling off your stocks? It’s simple, add gold to your portfolio!
I think it’s more than a 10% drop in one day to be an official crash. But there’s no doubt the stock markets are becoming more and more volatile so i think this figure might be revised one day soon.
Cynthia recently posted..Student Insurance Advice
You have a great insight here, Thanks for having such these.
Brien16 recently posted..Chamonix Mont Blanc
Very interesting topic..i really like this info..Thanks for sharing..
Angela recently posted..Slap And Tickle
Thanks for the info I will share this article to my friend because she like investing like this..
Frances recently posted..Insurance Options
Hey Admin,
Neat Post, There were a lot of worried faces today when the Dow Jones Industrial Average dropped some 450 points mid day. Excited faces that were full of joy just a day ago now looked very worried, and fearful, and this was reflected in the jittery responses of many traders.
Wishes