| year | gold $/oz | gas $/gal | gas gal/gold-oz | DJI (highs) | DJI shrs/gold-oz |
| 1970 | 35.44 | 0.35 | 101.26 | 728.23 | 20.55 |
| 1975 | 164.24 | 0.53 | 309.89 | 884.62 | 5.39 |
| 1981 | 464.76 | 1.19 | 390.55 | 1,023.02 | 2.20 |
| 1990 | 352.33 | 1.00 | 353.33 | 2,948.54 | 8.37 |
| 1998 | 292.32 | 1.06 | 275.77 | 9,104.72 | 31.15 |
| 2000 | 282.00 | 1.51 | 186.75 | 10,863.00 | 38.52 |
| 2003 | 355.00 | 1.59 | 223.27 | 9,352.77 | 26.35 |
| 2006 | 600.00 | 2.59 | 231.66 | 11,285.82 | 18.81 |
| 2009 | 945.00 | 2.35 | 402.13 | 8,877.93 | 9.39 |
| 2011 | 1520.00 | 3.53 | 430.59 | 12,569.49 | 8.27 |
| 2013 | 1578.00 | 3.82 | 413.09 | 14,413.17 | 9.13 |
historic gasoline prices in the US: source
historic gold prices: source
historic DJI prices: source
note:
looking at this data, your cost of fuel is roughly the same today as in 1981.. 390 vs 413...
but you can get almost 4 times as many shares of DJIA today as you could in 1981. this could
imply the companies are cheaper/valued in lower value dollars.
You have the calculations backwards.
The DJI chart shows the number of dollars it would cost to buy one “share” of the DJIA. Higher is a higher value. So, the last column is wrong.
In 1970, it would take 20 ounces of gold to purchase 1 share of stock.
In 1981, it would take 2.2 ounces of gold to purchase 1 share of stock. Clearly, between 1970 and 1981, gold did much much better than stocks.
But by today, it would take 9.13 oz of gold to purchase 1 share of stock. That’s over 4 times as expensive. So between 1981 and today, stocks did over 4 times as good as gold.
For the last column to be the number of shares you could buy with an ounce of gold (instead of how many ounces of gold would buy you one share, you have to invert.
In 1970, an ounce of gold purchased 1/20th of a share.
In 1981, an ounce of gold purchased 1/2 of a share.
In 2013, an ounce of gold purchase 1/10 of a share.
What all the charts show is that gold is extremely volatile, and is not in the short term a good proxy for constant wealth.
And Gold still has one major problem — it is illusion. The amount of gold we have today is way more than what is needed for all the required uses of gold. As a commodity, supply far outstrips demand.
Gold prices therefore are acting much more like “collector” pricing than commodity pricing. People “want” gold, like people might want a Van Gogh painting. So long as that is true, the value might hold, and the value swings wildly as people become more or less enamored with collecting gold.
But any day, the world could decide they aren’t interested in Gold. After all, it can’t be eaten, it is useless to most people as a metal, vanity only gets you so far. People may never lose their interest, but they could. Nobody NEEDS gold, at least not in the quantities that exist.
And on the day that people realize that, gold will cease to be a useful investment. That will happen in my opinion when the world enters 1st-world status.
The fact that gold tends to not obey supply/demand equations is a signal. What would happen if we found a new gold deposit that doubled the supply? In the current market, very little. It’s also why buying mining stocks doesn’t seem to track gold very well.
BTW, if you priced gold in oil, you’d find that gold hasn’t changed value much.