![]() ![]() ![]() ![]() Since 2018, stocks and gold both spiked, and despite the coronavirus pandemic and the recent stock market selloff, both assets are significantly higher now compared to 2018. The Dow accelerated even higher as gold hit a multi-year low in 2015. Gold topped out in 2011 after a meteoric rise, and then tumbled over the next few years as the Dow rose significantly. Here is a chart of the Dow along with gold ($/Oz) since 1975. Investors buying stocks with their cash reserves probably felt fine, but anyone selling gold to buy stocks most likely felt a lot of regret. to conserve the US gold stock in order to launch the Federal Reserve System. For example, when the Dow began making new highs in 2013, it was still down 75% (when priced in ounces of gold). The most recent DJIA closing value in this data set is 32827 on November 7. Also, we can visualize the opportunity costs of stock investing compared to these assets. Hopefully, this can help us catch rotations into or out of these assets as early as possible. I’m pricing the Dow Jones Industrial Average (DJI) in alternative assets like ounces of gold, barrels of oil, etc. Here are some charts I like to keep an eye on. The Dow Jones shows a nominal return of +8.2 annually while the inflation-adjusted S&P 500 is returning +3.9 annually on real terms. ![]()
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