<<gold relative to goods is supposed to be constant.>> Supposed to be but is it?
<<cite contrary historical experience to please do so.>>
Gold Mining Outlook by Steven Jon Kaplan
There is a strong correlation between commodity indices and the price of gold, which makes sense since gold is a proxy for all commodities. It is often said that the price of a good quality men's suit has always been equal to the price of one troy ounce of gold. This doesn't say, however, whether you got your suit on a markdown sale, or whether you prefer to shop at Brooks Brothers or K-Mart. A quick check at Barney's showed their executive suits averaging about $600, so this is bullish for gold. (Either that, or the price of men's suits is about to undergo a dramatic collapse!)
In January 1980, spot gold traded at $850 per troy ounce while the Dow Jones Industrial Average was about 800. As of Wednesday's close, the Dow buys 25.32 ounces of the yellow metal, a record since the price of gold was allowed to float in 1973.
geocities.com
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GOLD STOCKS AND THE GREAT CRASH OF 1929 REVISITED
This doesn't paste well but the gist is that $10,000 invested in Dow in 1929 went to $3,600 in 1935 and $10,000 invested in Homestake mining went to $62,000 in 1935.
As gold was fixed @ $35 per ounce this is the closest comparison I can come up with. (Using Homestake as the price of gold) I don't own this stock but it is still around!
gold-eagle.com |
