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I want to turn to gold... Richard Russell snippet Dow Theory Letters April 13, 2005 Extracted from the April 12, 2005 edition of Richard's Remarks Now I want to turn to gold and the dollar. The conventional wisdom is that gold is simply a protection against inflation. Not so, I buy gold on the thesis that US government finances are completely out of control, and that ultimately this must reflect is a falling dollar. So when I buy gold, I buy on the thesis that when the dollar fades or crashes, gold will still be (as it always has been) money. The chart below shows the Dow/gold ratio. History tells us that ultimately the ratio drops to 1 to 1. In other words, one share of the Dow buys one ounce of gold. At the recent 1999 highs, the Dow/gold ratio climbed to a record high of just over 40. The ratio has now dropped to 24.2, a decline in the ratio of 40 percent. Over time, I see one chart of the Dow again buying just one ounce of gold, at which time the Dow/gold ratio will again be at 1. At what price will gold and the Dow meet? Nobody knows, but if I had to guess I'd say around 3,000. I might that very few people are aware of his fundamental relationship between the Dow and gold. more follows for subscribers... Richard Russell website: Dow Theory Letters email: Dow Theory Letters Russell Archives © Copyright 1958-2008 Dow Theory Letters, Inc. Richard Russell began publishing Dow Theory Letters in 1958, and he has been writing the Letters ever since (never once having skipped a Letter). Dow Theory Letters is the oldest service continuously written by one person in the business. He offers a TRIAL (two consecutive up-to-date issues) for $1.00 (same price that was originally charged in 1958). Trials, please one time only. Mail your $1.00 check to: Dow Theory Letters, PO Box 1759, La Jolla, CA 92038 (annual cost of a subscription is $300, tax deductible if ordered through your business). 321gold Inc