Rules of this long-term trade:
The Dow-to-Gold ratio is guide for when to get in and out of stocks. When the ratio goes below 5, we buy equal shares in the Dow Jones Industrial Average index (the Dow). When the ratio goes above 15, we sell the Dow and buy gold .
In other words, when the entire Dow can be bought for five ounces of gold , we buy stocks. When it takes 15 ounces or more to buy the Dow, we sell stocks and buy gold .
Over the past 100 years, you would have made a total of six trades based on this strategy.