7 ms·

S&P500 Priced in Gold

51 points by jcartw 9mo ago

xeckr 9mo ago
Economic stagnation for over a decade? Aligns with the vibes, IMO.
- stephen_g 9mo ago
  Gold is just one of many commodities these days, mostly unconnected from most monetary systems for many decades. Treating it as the benchmark of value is really quite arbitrary, and I expect someone could compare the S&P to other random commodities and come up with completely different conclusions...
  - xeckr 9mo ago
    I'd definitely be curious to see the S&P valued in different commodities over time. With that said, gold certainly feels like a special indicator given its history as a universally recognized store of value.
    - ajross 9mo ago
      > history as a universally recognized store of value. History of what now? Gold is a volatile commodity. It has crashed, many times, often catastrophically, and had bear markets that dwarf anything you see in stocks.. A quick search tells me that inflation-adjusted gold prices dropped like 80% between 1979 and 2000. And given its value right now, it's probably due for another.
      - cyber_kinetist 9mo ago
        To add some context, gold was actually something backed by the US government during the Bretton Woods era (40s-70s), where 1 ounce of gold was pegged to 35 dollars. This was only possible because the US accumulated so much wealth relative to rest of the world after WWII, so they controlled the majority of the gold supply. After the golden age of Keynesian America ended with stagflation in the 70s, the US government had to stop all of their gold from fleeing the country, so this guarantee had to end. Which leads to the Nixon shock, where the dollar (and all other currencies as well) became free-floating, and we enter a brave new world where humanity hasn't lived before (neo-liberalism). Given all that, it's easy to see why the value of gold has plummeted during the 70s - 00s. Though I could see two reasons as to why gold prices are rising during the last decade: - Gold is actually just a part of the asset bubble (in the same group as housing, stocks, and crypto), and investment in it is aided by too much money printed by the US government not being used towards productive ends but towards rampant asset speculation. - The current era of neo-liberalism is going to end pretty soon, and some goldbugs are rooting for the revival of late 19th-century classical capitalism, where gold was actually the international standard. I think this is very unlikely though, even if the US dollar loses its status with the end of the petrodollar system. My guess is we're going to deal with free-floating currencies for quite some time, especially when wars are going to happen and governments have to print more money to sustain their war efforts. (I think the best monetary system would be neither gold or crypto, but instead something like the Bancor (https://en.wikipedia.org/wiki/Bancor https://en.wikipedia.org/wiki/Bancor))
        ajross 9mo ago
        This is one of those bell curve memes. All your text sits in the middle. The Jedi and I are off on the ends screaming "Gold is just a bubble!"
  - OutOfHere 9mo ago
    Not really. Gold is not a random commodity. It is historically the primary compact store of value, only recently to meet competition with Bitcoin.
- stego-tech 9mo ago
  I mean, yeah, but the parallels OP is drawing really kinda feel like the lingering whispers of the “gold standard” crowd rather than anything more substantial. For the working classes, the peak was the dotcom bubble - everything after that has been repeated speculative bubbles attempting to create explosive growth from nothing of substance, as much a deliberate decision of Capital to weaken the working classes while extracting wealth as it was a desperation gambit by an increasingly stable (but not yet stagnant circa mid-2000s) western hemisphere and its governments. Gold alone isn’t an indicator of this, so much as all asset prices skyrocketing to the moon while worker wages remained relatively flat and precarity increased. Metals, securities, housing, land, all of it has appreciated faster than working wages have kept pace, reflecting a siphoning of that wealth into fewer hands. Gold just makes the story “neater” to tell to folks lamenting the heyday of Breton Woods.
syntaxing 9mo ago
What does this mean? That the valuation of dollar dropped as much as the SP500 growth?
- knocte 9mo ago
  Yes
  - AnimalMuppet 9mo ago
    No. Very much no. It means that gold does not have a stable value, and using it as the yardstick to measure the value of other things just leads to confusion.
sebmellen 9mo ago
I’d be interested to see a similar chart for silver.
sebmellen 9mo ago
This is a very interesting chart but I can't figure out if it takes compounding into account or not.
- FreeTrade 9mo ago
  Yes, these charts keep popping up on my Twitter and it's always difficult to know what they are really measuring.
- vessenes 9mo ago
  It’s just s&p 500 index value divided by gold to get a “gold native” number. The compounding represented here would be the growth of the companies that has been “compounded” as a result of their internal investment
  - hdgvhicv 9mo ago
    It’s ignoring S&P dividends which add a significant amount. S&P on its own is up 20 fold since 1990 SP500TR Is up 40 fold.
    - vessenes 9mo ago
      I guess if your purpose of the site is to make yourself feel good about gold they chose the proper index. Agreed if you want to compare the decidedly non-dividending gold as an asset class TR makes sense.
hnburnsy 9mo ago
Totally misleading, S&P with dividends reinvested blows away gold since 1950 or 1971. S&P 500 Investment (with Dividends Reinvested) Historical data shows that $10,000 invested in the S&P 500 at the start of 1950, with all dividends reinvested, would grow to approximately $3,836,763 by the end of 2025. Gold provided pure price appreciation (no yield or dividends). The multiplier is about 124.7× ($4,360 ÷ $35), or an annualized return of roughly 6.8% over 75 years. Ounces purchased in 1950: $10,000 ÷ $35/oz ≈ 285.71 ounces Current value: 285.71 oz × $4,360/oz ≈ $1,246,700
- FreeTrade 9mo ago
  And to be extra fair, we might want to subtract tax from those dividends before reinvestment.
  - lostlogin 9mo ago
    Storing that gold most cost something too.
    - OutOfHere 9mo ago
      Storing gold costs nothing but a little space which isn't an issue given how compact it is.
      - deleted 9mo ago
        [deleted]
      - deleted 9mo ago
        [deleted]
      - bot403 9mo ago
        Oh good. I have a spare spot in my front yard to place it. Or maybe I'll just set it down on my dining room table. Wait...I might want something more secure than that. And if I have a lot of gold I might need to pay people to protect it. These storage costs are going up.
xnx 9mo ago
What is the point of this chart? It would make more sense to price in terms of hamburgers or any other reasonably consistent item of real consistent value/utility.
- wmf 9mo ago
  The site is trying to find evidence for retvrning to the gold standard.
therobots927 9mo ago
Now do it compared to the median home value.
- hnburnsy 9mo ago
  Gold has 100x while median homes values have 15-20x since 1971.
foxglacier 9mo ago
I sometimes wonder if we should be measuring money in some other unit besides dollar/etc. to reveal inflation. We could report bank balances and wages that way so the effect of inflation is obvious instead of being a trick to silently steal money off people. But it's tricky because there's no natural measure of inflation. Gold seems like a good idea in a way but I don't understand enough to know.
- cykros 9mo ago
  The issue is that broad money isn't money. It's credit. And measuring credit is like measuring both velocity and position at the same time. The Fed tried to measure dollar supply globally for decades before giving up as they finally got their heads around how the Eurodollar network works, and they've kept somewhat quiet about the fact that they're just not actually at the center of it.
omoikane 9mo ago
I wonder if this was a 2013 article that linked to live updating charts (with data from 2025) since there are Google+ and Twitter buttons at the end, and two 2013 timestamps below those.
maerF0x0 9mo ago
It's tricky because it's unclear if the S&P500 will halve (Market pessimism), or if Gold price will double (currency devaluation)... I need to see both of them priced in loaves of bread.
- aurareturn 9mo ago
  If currency devalue, S&P500 would go up since equities will hold value better than cash.
  - alecco 9mo ago
    It's way more complex. Technology is driving deflation even for equities as extraction and refinement becomes cheaper. But the worst is mass migration an the bulge of the world population pyramid entering working age [1]. Labor costs down for corporations and our wages evaporate. Compound with AI and automation. I think the future is very unpredictable. [1] https://www.populationpyramid.net/world/2025/ https://www.populationpyramid.net/world/2025/
    - maerF0x0 9mo ago
      I'm not sure how the cycle continues though if we dont have jobs, the companies do not have buyers?
throwaway81523 9mo ago
Looks like Brownian motion to me.
cykros 9mo ago
The price of gold pre-1971 was always a fantasy as there was no free market for it, due to the policy rate sitting on it at $35/oz. The price of gold before 1933 (EO 6102) was also not a terribly good indicator, as the friction of taking physical delivery of it also kept it suppressed in most circumstances, with explosive swings in times of crisis. Arguably it's even more gamed after 1971 as it's not even used for exchange, and has a ton of rehypothecation and elaborate derivative networks. Gold's drawback was always its physicality. Arguably its heyday was before the invention of the telegraph, when at least the expectation was that money was going to be slow, and the only way to move it across most distances was physically, unless you had some handy Knights Templar or Hawala network handy. That we still cling to it despite all of this is a good indicator of just how fucked up fiat is though. Thankfully, we have a better alternative network being built out.

51 points by jcartw 9mo ago

xeckr 9mo ago

Economic stagnation for over a decade? Aligns with the vibes, IMO.

stephen_g 9mo ago
Gold is just one of many commodities these days, mostly unconnected from most monetary systems for many decades. Treating it as the benchmark of value is really quite arbitrary, and I expect someone could compare the S&P to other random commodities and come up with completely different conclusions...
- xeckr 9mo ago
  I'd definitely be curious to see the S&P valued in different commodities over time. With that said, gold certainly feels like a special indicator given its history as a universally recognized store of value.
  - ajross 9mo ago
    > history as a universally recognized store of value. History of what now? Gold is a volatile commodity. It has crashed, many times, often catastrophically, and had bear markets that dwarf anything you see in stocks.. A quick search tells me that inflation-adjusted gold prices dropped like 80% between 1979 and 2000. And given its value right now, it's probably due for another.
    - cyber_kinetist 9mo ago
      To add some context, gold was actually something backed by the US government during the Bretton Woods era (40s-70s), where 1 ounce of gold was pegged to 35 dollars. This was only possible because the US accumulated so much wealth relative to rest of the world after WWII, so they controlled the majority of the gold supply. After the golden age of Keynesian America ended with stagflation in the 70s, the US government had to stop all of their gold from fleeing the country, so this guarantee had to end. Which leads to the Nixon shock, where the dollar (and all other currencies as well) became free-floating, and we enter a brave new world where humanity hasn't lived before (neo-liberalism). Given all that, it's easy to see why the value of gold has plummeted during the 70s - 00s. Though I could see two reasons as to why gold prices are rising during the last decade: - Gold is actually just a part of the asset bubble (in the same group as housing, stocks, and crypto), and investment in it is aided by too much money printed by the US government not being used towards productive ends but towards rampant asset speculation. - The current era of neo-liberalism is going to end pretty soon, and some goldbugs are rooting for the revival of late 19th-century classical capitalism, where gold was actually the international standard. I think this is very unlikely though, even if the US dollar loses its status with the end of the petrodollar system. My guess is we're going to deal with free-floating currencies for quite some time, especially when wars are going to happen and governments have to print more money to sustain their war efforts. (I think the best monetary system would be neither gold or crypto, but instead something like the Bancor (https://en.wikipedia.org/wiki/Bancor https://en.wikipedia.org/wiki/Bancor))
      - ajross 9mo ago
        This is one of those bell curve memes. All your text sits in the middle. The Jedi and I are off on the ends screaming "Gold is just a bubble!"
- OutOfHere 9mo ago
  Not really. Gold is not a random commodity. It is historically the primary compact store of value, only recently to meet competition with Bitcoin.
stego-tech 9mo ago
I mean, yeah, but the parallels OP is drawing really kinda feel like the lingering whispers of the “gold standard” crowd rather than anything more substantial. For the working classes, the peak was the dotcom bubble - everything after that has been repeated speculative bubbles attempting to create explosive growth from nothing of substance, as much a deliberate decision of Capital to weaken the working classes while extracting wealth as it was a desperation gambit by an increasingly stable (but not yet stagnant circa mid-2000s) western hemisphere and its governments. Gold alone isn’t an indicator of this, so much as all asset prices skyrocketing to the moon while worker wages remained relatively flat and precarity increased. Metals, securities, housing, land, all of it has appreciated faster than working wages have kept pace, reflecting a siphoning of that wealth into fewer hands. Gold just makes the story “neater” to tell to folks lamenting the heyday of Breton Woods.

syntaxing 9mo ago

What does this mean? That the valuation of dollar dropped as much as the SP500 growth?

knocte 9mo ago
Yes
- AnimalMuppet 9mo ago
  No. Very much no. It means that gold does not have a stable value, and using it as the yardstick to measure the value of other things just leads to confusion.

sebmellen 9mo ago

I’d be interested to see a similar chart for silver.

sebmellen 9mo ago

This is a very interesting chart but I can't figure out if it takes compounding into account or not.

FreeTrade 9mo ago
Yes, these charts keep popping up on my Twitter and it's always difficult to know what they are really measuring.
vessenes 9mo ago
It’s just s&p 500 index value divided by gold to get a “gold native” number. The compounding represented here would be the growth of the companies that has been “compounded” as a result of their internal investment
- hdgvhicv 9mo ago
  It’s ignoring S&P dividends which add a significant amount. S&P on its own is up 20 fold since 1990 SP500TR Is up 40 fold.
  - vessenes 9mo ago
    I guess if your purpose of the site is to make yourself feel good about gold they chose the proper index. Agreed if you want to compare the decidedly non-dividending gold as an asset class TR makes sense.

hnburnsy 9mo ago

Totally misleading, S&P with dividends reinvested blows away gold since 1950 or 1971. S&P 500 Investment (with Dividends Reinvested) Historical data shows that $10,000 invested in the S&P 500 at the start of 1950, with all dividends reinvested, would grow to approximately $3,836,763 by the end of 2025. Gold provided pure price appreciation (no yield or dividends). The multiplier is about 124.7× ($4,360 ÷ $35), or an annualized return of roughly 6.8% over 75 years. Ounces purchased in 1950: $10,000 ÷ $35/oz ≈ 285.71 ounces Current value: 285.71 oz × $4,360/oz ≈ $1,246,700

FreeTrade 9mo ago
And to be extra fair, we might want to subtract tax from those dividends before reinvestment.
- lostlogin 9mo ago
  Storing that gold most cost something too.
  - OutOfHere 9mo ago
    Storing gold costs nothing but a little space which isn't an issue given how compact it is.
    - deleted 9mo ago
      [deleted]
    - deleted 9mo ago
      [deleted]
    - bot403 9mo ago
      Oh good. I have a spare spot in my front yard to place it. Or maybe I'll just set it down on my dining room table. Wait...I might want something more secure than that. And if I have a lot of gold I might need to pay people to protect it. These storage costs are going up.

xnx 9mo ago

What is the point of this chart? It would make more sense to price in terms of hamburgers or any other reasonably consistent item of real consistent value/utility.

wmf 9mo ago
The site is trying to find evidence for retvrning to the gold standard.

therobots927 9mo ago

Now do it compared to the median home value.

hnburnsy 9mo ago
Gold has 100x while median homes values have 15-20x since 1971.

foxglacier 9mo ago

I sometimes wonder if we should be measuring money in some other unit besides dollar/etc. to reveal inflation. We could report bank balances and wages that way so the effect of inflation is obvious instead of being a trick to silently steal money off people. But it's tricky because there's no natural measure of inflation. Gold seems like a good idea in a way but I don't understand enough to know.

cykros 9mo ago
The issue is that broad money isn't money. It's credit. And measuring credit is like measuring both velocity and position at the same time. The Fed tried to measure dollar supply globally for decades before giving up as they finally got their heads around how the Eurodollar network works, and they've kept somewhat quiet about the fact that they're just not actually at the center of it.

omoikane 9mo ago

I wonder if this was a 2013 article that linked to live updating charts (with data from 2025) since there are Google+ and Twitter buttons at the end, and two 2013 timestamps below those.

maerF0x0 9mo ago

It's tricky because it's unclear if the S&P500 will halve (Market pessimism), or if Gold price will double (currency devaluation)... I need to see both of them priced in loaves of bread.

aurareturn 9mo ago
If currency devalue, S&P500 would go up since equities will hold value better than cash.
- alecco 9mo ago
  It's way more complex. Technology is driving deflation even for equities as extraction and refinement becomes cheaper. But the worst is mass migration an the bulge of the world population pyramid entering working age [1]. Labor costs down for corporations and our wages evaporate. Compound with AI and automation. I think the future is very unpredictable. [1] https://www.populationpyramid.net/world/2025/ https://www.populationpyramid.net/world/2025/
  - maerF0x0 9mo ago
    I'm not sure how the cycle continues though if we dont have jobs, the companies do not have buyers?

throwaway81523 9mo ago

Looks like Brownian motion to me.

cykros 9mo ago

The price of gold pre-1971 was always a fantasy as there was no free market for it, due to the policy rate sitting on it at $35/oz. The price of gold before 1933 (EO 6102) was also not a terribly good indicator, as the friction of taking physical delivery of it also kept it suppressed in most circumstances, with explosive swings in times of crisis. Arguably it's even more gamed after 1971 as it's not even used for exchange, and has a ton of rehypothecation and elaborate derivative networks. Gold's drawback was always its physicality. Arguably its heyday was before the invention of the telegraph, when at least the expectation was that money was going to be slow, and the only way to move it across most distances was physically, unless you had some handy Knights Templar or Hawala network handy. That we still cling to it despite all of this is a good indicator of just how fucked up fiat is though. Thankfully, we have a better alternative network being built out.