Fact of the day

For people watching the economic collapse unfold who have a sudden interest in markets, exchange rates, economic indicators and historic trends, there has been a change in people's understandings.

We no longer accept the 'conventional wisdom' of the earlier part of this decade:

• Property doesn't "always go up"
• Shares don't "always go up over the long run" (i.e long run = 20 -30 year periods)
• Governments can't fix, manage or guide an economy to produce economic growth and stability.

Here's some wisdom from the folks at Daily Reckoning, who continue to promote their "trade of the decade" otherwise known as: Buy Gold on the dips, Sell Stocks on the rallies.

In 1982, briefly, you could have bought every one of the stocks in the Dow index for a single ounce of gold. But by the time the stock market finished its epic rise, in January 2000, (while gold was doing an epic fall!) you would have needed 44 ounces of gold to buy the Dow. Now, that ratio has come down considerably. You only need about 13 ounces of gold to buy the Dow. And as stocks come down, the ratio is likely to fall below 5...and eventually back to 1 to 1 (at which time, remember, it will be time to sell gold and buy shares).