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Long-Term Gold Vs. Stocks

Published 03/03/2016, 03:30 PM
Updated 07/09/2023, 06:31 AM

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

  • 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.

Inflation-Adjusted Gold

Figure 1 (Source: MacroTrends.net)

Inflation-Adjusted Dow Industrials

Figure 2 (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 inflation.

Non-Adjusted Gold

Figure 3 (Source: MacroTrends.net)

Non-Adjusted Dow Industrials

Figure 4 (Source: MacroTrends.net)

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