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Stocks Keep Crashing

Over the past decade or so, equities have been mired in a vicious bear market. The extent of this bear is not so apparent in nominal terms. After all, major indexes eclipsed their 2000 highs prior to the 2008 liquidation. However, in terms of gold, stocks have suffered a series of crashes, none of which have been recovered:

dow jones vs gold 1999

dow jones industrials versus gold 2003

dow jones industrial versus gold 2006

dow jones industrial versus gold 2009

At the 2009 low, stocks had lost 85% of their real-money value in less than a decade... and the wealth destruction does not appear to be quite finished:

dow jones industrials versus gold 2010

The fifth crash of the secular bear market in stocks appears to be underway. Typically, these periods do not finish until the Dow reaches parity with gold, so traders can expect two more crashes over the next several years before this process completes.

Amazingly, the masses continue to wish stocks higher... not wanting to admit their mistakes... while ignoring the sector that can actually return their money. Somehow I suspect they will catch on right about the time the Dow and gold approach parity. At that point, I'll be happy to trade my gold for their equities.



Disclosure: Long precious metals