DOW 700!

The current dividend yield on Dow stocks is about 3%. In 1932, at the depression market bottom, the dividend yield on the Dow was at 17%.

What does that mean in terms of today's Dow?

If we are indeed in a depression, and if, as they always do, markets overreact and crash, then to reach a 17% dividend yield, the Dow Jones Industrial Average must drop from its current level of 8000 to 1,400.

That of course assumes that dividend yields remain at current levels, which is unlikely, as companies that are strapped for cash will most assuredly cut their dividends.

If dividends are cut another 50% between now and the bottom (which I believe is a pretty conservative estimate) then you can look for a Dow of around 700.

Got Gold?