This probably qualifies more as a “market tidbit” than as a tradable idea, but I found it interesting so decided to pass it along.
- Figure 1 displays historical gold prices for the past 100 years. It uses a log scale and the values are inflation adjusted.
- Figure 2 displays historical Dow Jones Industrials prices for the past 100 years. It uses a log scale and the values are inflation adjusted.
I added red and green arrows to highlight the major trend. For what it is worth, I think I see a (far from perfect, but nevertheless viable) long-term inverse relationship here.
Figure 1 (Source: MacroTrends.net)
Figure 2 (Source: MacroTrends.net)
Interestingly, If you do not adjust the values for inflation the trend is much less clear. Figures 3 and 4 show gold and the Dow respectively without adjusting for inflation.
Figure 3 (Source: MacroTrends.net)
Figure 4 (Source: MacroTrends.net)