Dow/Gold relationship

We often read about how the Dow peaked in 'nominal terms' back in 1999 and how since then in 'real terms' (if priced in gold for example), it has been a lost decade for the Dow. I guess its a valid point to a degree but one must not lose sight of the fact that we can 'price relative' anything we want to.

Anyway, post the recent decline in gold, this relationship appears to have put in a bottom, even if it proves to be temporary.

On this 10x3 P&F it can be seen that the ratio found some resistance at the 640 level (0r 6.4 based on the candle chart) - on no less than four occasions, but that has now been taken out, giving two targets to the upside of 780 and 750 (note the current 200 day mva on the candle chart is 7.9 (or 790 in the context of this P&F). So if this target is to be met, we can assume that one of the following will happen:

- The Dow will rise and gold will fall/stay unchanged

- Both will rise but the Dow will rise faster than gold

- Both will fall but the Dow will fall less than gold

Take your pick!