Yes, we know, the Dow Jones blew through the 10,000 mark today, but compared to 10 years ago, the Dow Jones is actually at 7,537 in real terms as discussed in DOW 10,000!!!! Oh Wait, Make That 7,537:
Another great representation of the amazing loss of purchasing power by the US public are today’s oblivious statements about the Dow at 10,000. While in absolute terms the Dow may cross whatever the Fed thinks is a necessary and sufficient mark before QE begins to taper off (Dow crosses 10k just as Treasury purchases expire), the truth is that over the past 10 years (the first time the DJIA was at 10,000) the dollar has lost 25% of its value. Therefore, we present the Dow over the last decade indexed for the DXY, which has dropped from 100 to about 75. On a real basis (not nominal) the Dow at 10,000 ten years ago is equivalent to 7,537 today! In other words, not only have we had a lost decade for all those who focus on the absolute flatness of the DJIA, but it is also a decade where the US Consumer has lost 25% of purchasing power from the perspective of stocks! You won’t hear this fact on the MSM.
We’d also like to point out that 10 years ago, the price of gold was roughly $275 an ounce in October 1999. At around the same time, the Dow Jones was, ironically, right at 10,000. This means that it took about 36 ounces of gold to buy all of the Dow stocks, or a 36 to 1 Gold to Dow Ratio. Today’s Gold to Dow Ratio? About 10 to 1 (gold = $1050 per ounce; Dow Jones at 10,000).
While we here at SHTFplan.com think that a major crash is coming in the Dow Jones at some point in the near future – maybe some time between now and February, nothing is out of the realm of possibility therefore there is a possibility that the Dow Jones will never go lower again because of a collapsing US Dollar. We may even get to see the Dow Jones at 20,000, perhaps even 30,000, some time in the next few years. Millions will cheer while their 401k’s double in value, but will anyone notice that their buying power will be depleted by 75% or more? We wonder.