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Dow:Gold Ratio

A major trend indicator.

The Dow:Gold Ratio is an indicator which shows investors whether to favour precious metals or stocks in their portfolio. It is calculated by dividing the Dow Jones Industrial Index by the price of an ounce of gold. More simply it is the number of ounces of gold required to “buy” one unit of the Dow. When the ratio is rising, it is time to be overweight (purchase more) stocks and other financial assets. When the ratio is falling, it is time to be overweight gold and precious metals in your portfolio. As this figure clearly shows, the ratio has been falling since 2000 and economic conditions make it likely that it will continue to fall to a 2:1 or 1:1 ratio. This ratio decline is positive for holding gold and precious metals.

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Click to view enlarged image
In a world of increasing volatility and uncertainty, precious metals provide tangible, predictable wealth protection against depreciating currencies and investment portfolios. For the past several years, as currency creation has gone into unprecedented overdrive, gold, silver and platinum have resumed their traditional role as a store of wealth. Over time purchasing and adding to a core holding of physical bullion is a prudent investment strategy.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance many not be repeated.

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