snipped from: http://www.zerohedge.com/article/guest-post-so-much-market-being-cheap-charting-50-75-downside-case-sp

Which brings me to the S&P500 / Gold ratio chart.

Historically, the value of the S&P500 relative to the price of gold reaches a bottom at roughly 28% (all-time low = 19%). The ratio is currently 94%.

Assuming a gold price of $1,500 or $2,000 (reasonable given fundamental backdrop) suggests an S&P500 value of 375-500.

Isn't it crazy to see how the market cycles vs. the price of gold through history? This is the third major secular bear market for stocks relative to gold over the past 110 years and it shows up decisively in the chart.

If you believe that everything reverts back to its mean and even overshoots (i.e., when you stretch the rubber band too hard in one direction it has to snap back even harder in the other), then the unprecedented explosion in the market vs. the value of gold in 2000 (almost 6.0 on the chart) relative to other historical peaks at the top of secular bull markets (1929 and 1966) suggests greater upside than $1,500-$2,000 for gold and more downside than 375-500 for the S&P500.

Further, the SPX / Gold ratio chart is where we form our timing thesis of 2012 being a potential bottom for this secular bear.

Notice how troughs in the S&P500 relative to the price of gold have typically taken 12-13 years to play out. The S&P500 put its peak in relative to gold 10 long years ago in 2000. We sure are close.