Recently while reading another blog I came to realize that my comparison to the boom/bust cycle in the 1970s was a little flawed. The reason is that between 1960 and 1984 there were more than one crash. You could say there were 5, but the most prominent are the first three. You can see them plainly on this new chart:
Seeing those numerous crashes and the idea that the nominal Dow highs are actually coming later in each Dow/Gold Ratio (or Boom/Bust) cycle, I realized that my comparison between the Dow in the 70’s and the Dow today could be made with any of the three. Here it today compared to the 1966 crash:
And with 1968:
Now, which of these is correct? Maybe none of them. Maybe there will be more crashes. Or deeper ones. As you can see, the first crash in this cycle was a staggering 50%, compared to the first crash in the previous cycle in 1966 of 20%. Back then each crash was bigger, too, by about 10%. What does that mean is coming?
Hard to tell.
But one thing is certain – it will either be a wicked crash – or a crack-up boom. Neither of them is good.
Unfortunately, the damage is already done.