Gold vs. Stocks Long-Term

  • SumoMe

This probably qualifies more as a “market tidbit” than as a tradable idea, but I found it interesting so decided to pass it along.

(See also An Update on 26% a Year on 3 Trades a Year)

Figure 1 displays Historical Gold Prices for the past 100 years.  It uses a log scale and the values are inflation adjusted.

Figure 2 displays Historical Dow Jones Industrials Prices for the past 100 years.  It uses a log scale and the values are inflation adjusted.

I added red and green arrows to highlight the major trend.  For what it is worth, I think I see a (far from perfect, but nevertheless viable) long-term inverse relationship here.1

Figure 1 – Gold price; inflation adjusted (Source: MacroTrends.net)3

Figure 2 – Dow Industrials price; inflation adjusted (Source: MacroTrends.net)

Interestingly, If you do not adjust the values for inflation the trend is much less clear.  Figures 3 and 4 show Gold and the Dow respectively without adjusting for inflation2Figure 3 – Gold price; NOT inflation adjusted (Source: MacroTrends.net)4Figure 4 – Dow Industrials price; NOT inflation adjusted (Source: MacroTrends.net)

 

Jay Kaeppel

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