The 55% Decrease in the Value of the Dow Jones Industrial Average

Here’s something you might read anywhere else:

The world’s most widely followed stock market index is obviously the Dow Jones Industrial, often just referred to by market commentators as the DOW. This index is a weighted average of 30 of the largest companies in the world. Today, the DOW sits at about its record high.

And here’s something you probably won’t come across:

But, if we measure the value of the DOW in after-inflation dollars, the DOW is still well below what it traded for in 1999 — eight long years ago. We can also look at the DOW in a couple of other ways.

If the DOW is measured in euros, not dollars, it is trading well below its 1999 high. The picture gets more dramatic if the DOW is measured in gold bullion.

Only five years ago, back in early 2002, when the gold bullion bull market started, it would take approximately 40 ounces of gold bullion to equal the value of the DOW. Today, at gold’s current price, it would take approximately 18 ounces of gold to equal the value of the DOW. In other words, if we measure the DOW in gold bullion, and not in U.S. dollars, the DOW is down 55% over the past five years.

The depreciation of the DOW in gold bullion currency is startling. Unfortunately, very few retail investors are aware of the bull market in gold bullion and the severe erosion of the DOW in paper dollars.

In 2003, I made a bold forecast that, at some point ahead, the value of one ounce of gold bullion would be equal to the value of the DOW. I’m getting close to the fruition of that prediction — and I am quite happy to stick by it today.