How many ounces of gold to buy one "share" of the Dow Jones
It takes 8.63 oz of gold to buy one "share" of the Dow
Gold is expensive relative to stocks. Historically a sign that gold may be overvalued or stocks undervalued.
Neutral territory. Both assets are fairly valued relative to each other based on historical norms.
Stocks are expensive relative to gold. Often seen at stock market peaks (1929, 1999).
| Year | Ratio | Event |
|---|---|---|
| 1980 | 1.0:1 | Gold peaks at $850, Dow at 850 |
| 1982 | 2.5:1 | Start of bull market |
| 1990 | 6.5:1 | Gulf War begins |
| 1995 | 10.0:1 | Tech boom begins |
| 1999 | 44.0:1 | Dot-com bubble peak |
| 2000 | 38.0:1 | Tech crash begins |
| 2007 | 19.0:1 | Pre-financial crisis |
| 2008 | 12.0:1 | Financial crisis |
| 2011 | 6.5:1 | Gold peaks at $1,900 |
| 2015 | 16.0:1 | Dollar strength |
| 2018 | 21.0:1 | Stock market high |
| 2020 | 14.0:1 | COVID crash and gold surge |
| 2022 | 17.0:1 | Inflation concerns |
| 2024 | 10.5:1 | Gold bull market |
| 2026 | 8.6:1 | Current |
The Dow to Gold ratio is one of the most important metrics for long-term investors. It measures the relative value of the stock market (represented by the Dow Jones Industrial Average) against gold, the ultimate store of value and inflation hedge.
Unlike comparing absolute prices, this ratio removes inflation from the equation and shows the true relative performance of stocks versus hard assets. A falling ratio means gold is outperforming stocks; a rising ratio means stocks are outperforming gold.
The Dow to Gold ratio is calculated by dividing the Dow Jones Industrial Average price by the price of one ounce of gold. It shows how many ounces of gold are needed to buy one "share" of the Dow. This ratio helps investors compare the relative value of stocks versus gold over time.
Historically, a low ratio (under 10) suggests gold is expensive relative to stocks, while a high ratio (over 20) suggests stocks are expensive relative to gold. The historical average is around 10-15, though the ratio has ranged from 1:1 (1980) to 44:1 (1999).
In January 1980, gold peaked at around $850/oz due to extreme inflation fears, the Soviet invasion of Afghanistan, and the Iranian hostage crisis. Meanwhile, the Dow was also around 850 points, having gone essentially nowhere since 1966. This convergence at 1:1 marked an extreme in gold valuation.