Either Stock or Gold

In every analysis I have done over the years, I have said that I hold either gold or equities. I have never been in cash other than equities. These charts explain why.

From 1884 to 1970, you could buy 1 SP500 share with an average of 0.74 gold or $14.75. So there is not much point in choosing between gold and the dollar during this period because the Bretton Woods system is still in place. But the real problem starts after 1970. After the Bretton Woods system was abolished, you can now buy 1 SP500 share with an average of 2 gold coins. Yes, the stock is rising relative to gold, but it is not in a continuous upward trend, so you can buy SP500 shares with 2 gold in 1972 or 2020. But in dollar terms, things are not so good. In 1970 you could buy SP500 for $100 and in 2020 you can buy SP500 for $3000.

Therefore, when you sell a share, going for gold instead of cash may put you at a speculative loss in the short term, but in the long term you are always on the winning side.