Today's gold buyers might still get to look early birds as this depression wears on...

GROWTH or defense... stocks or gold? Intra-day noise aside in summer 2011, Mr.Market's choice looks plain.

The Dow/Gold Ratio - a measure of the US stock market's valuation in ounces of gold - has sunk as equities have plunged but gold prices have jumped so far this summer.

Dropping through 6.0 ahead of Friday's New York opening, the Dow/Gold Ratio hasn't been this low since early 1989, back when world equity markets were recovering from the Great Crash of Black Monday 1987.

That slump itself had taken the Dow/Gold Ratio all the way down to 3.6, with gold prices rising to nearly $500 per ounce as the Wall Street index sank to 1776 points. Growth, of course, was only taking a pause in late 1987 - a quick breather before the real race to perfection of the late 1990s. Today, in contrast, the Dow/Gold Ratio could still go a lot further down. Or so says history.

Trading a little over its century-long average of 10.0 today, the ratio bottomed during the 1930s Great Depression at just below 2.0 ounces of gold for one Dow unit. At the nadir of the next global depression - the inflationary depression of the early 1980s - the Dow/Gold Ratio sank even lower, down to 1.0.

Whatever flavor of depression we've got at the start of this decade - and it is a depression, as Western jobs data continue to show and as the Dow/Gold yardstick will confirm if it goes much lower (keep an eye on the underperformance of gold mining equities, too) - a growing flow of private savings is choosing defense in gold bullion rather than choosing business-risk in listed stocks. That choice might sound self-fulfilling if you work in psychiatry or government, a kind of "clinical disorder" open to curing with medication, zero interest rates or perhaps a third round of quantitative easing - most likely aimed at risk assets, we guess, rather than the "risk free" Treasury bonds targeted by QE1 and QE2 - and which institutional investors are all-too keen to hold anyway.

So far, however, investors choosing to buy gold only account for a tiny portion of the money fleeing equities. From here to a true depression low in Dow/Gold (if such a level is reached), today's gold buyers will need to find many more friends. They'd also look early-birds compared with the rush out of stocks - and into gold - needed to reach that 2.0 or 1.0 mark.