Dow to Lose 97% Against Gold

The comments above & below is an edited and abridged synopsis of an article by Egon von Greyerz

In the last 48 years, an investor who put $1,000 into the Dow would today have $33,000. That is a gain of 3,200% or 7.6% annually. On the other hand, someone who put $1,000 into gold in 1969 would today have $37,000 or 7.8% annual return. But if you add dividends to the Dow, the return is 10.7% with the dividends reinvested.

No one could have predicted those returns. In the p

revious 48 years, the Dow only rose 9 times, but with higher dividends in that period the total return would still have been 10% annually. Gold only had one move up during that period, from $31 to $45 in 1933, when the dollar was devalued. That is only a 1.5X increase. Because of the gold standard, those 48 years had relatively sound money and therefore limited credit creation.

Although history can be an excellent teacher, it tells us nothing about the future. Few would have predicted a 23,000 Dow 48 years ago. So what will happen in the next 48 years? If you give your grandchildren a gift today, would it be stocks or gold?

Von Greyerz discusses the Dow falling to 1,000; debt growing 2.5 times faster than GDP; real GDP being down 8% since 2006; gold outperforming all assets over the next 10 years; and the Dow to fall 97% against gold.