Dow Jones Index @ all-time high?

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Is the Dow Jones Index (DJI) really at an all-time high? Some might consider me crazy for posing such a question. Of course the DJI is at an all-time high over 12,3000! Back in 2001, the Dow previously peaked at 11,337 nearly 5% below today’s levels.

But there are those who would argue that the DJI is far from it’s historical highs and here’s why. In dollar terms, the DJI is up marginally from its previous peak set in January of 2000 and it is up 65% since it bottomed on 10/9/2002. However, the DJI is actually down when priced in gold. While the vast majority of people including the media, government and Wall Street price the market in dollar terms, there are some really intelligent economists out there who argue that the market should be priced in terms of hard currency (i.e. gold) and not fiat currency (US$). Here are the figures:

Asset......................Jan ’00..........Oct ’02..........Dec ‘06

Dow.........................11,723..........7,286 ..........12,300

Gold..........................280..............320..................630

DJI/Gold Ratio.........41.9..............23.8................19.5

Therefore, when you price the DJI in gold, it is actually down more than 50% since 2000 and down 14% from it’s bear market bottom in Oct of ’02. You’d have been better off buying Gold in late 2002 than the DJI and that would have been the best time to buy the DJI in nearly a decade. Just some food for thought.