Dow Jones Worth In Gold- The real value of New highs

Dow jones closed near 14400 levels this Friday. If we go and look at long term Dow Jones charts it is now trading well above it 2008 and 2012 highs.

Strong US markets are one of the strongest indications of a good global recovery. In a way better than expected jobs data this Friday on US markets was also no surprise if we put these facts together.

Strong Bullish sentiments is also echoed from the fact that markets are now discounting European concerns, take for example recently volatility due to news emerging out from Italy.

 

While a strong bullish year for global markets is no doubts on the cards, this is a good time to take a skeptic look and do some valuation analysis for the markets over a long term. Presenting here some food for thought to you dear friends the long term charts of Dow Jones versus gold.

DOW JONES Versus GOLD-- Long term Cyclical Charts

The charts reveal a completely different data and point of view. Based on this we see that actual valuation when compared to gold, a global benchmark is way lower than previous top.

The pair ratio made a all-time high in 1999 near 42 levels and is now trading at about 8.

So what are the inferences from this chart for a long term investor. And also to judge where global markets may be headed.

 

·         Firstly the value is not what all meets the eye, market valuations from a real worth perspectives are way away from the top. So always referring to old levels from valuations point of view will mean the same thing.

·         Secondly,if we see the trend line levels of this charts. We are out there to test a long term top created a level of 8.87. If this is taken out we may be seeing a lot of money moving out of Bullion and ploughing back into equity markets.

·         The pair is also now about to test a descending trend line a move above that will confirm a breakout and a long term bullish markets in true sense.

·         The Ratio has created a bottom near 6.3 levels and this will be something worth to watch out for in coming months. A beak of that bottom can signify another correction cycle for the markets.