The Charts section has been updated with a new chart of the Dow Jones Industrial Average, this one from 1900 to present. The three big bull markets of this 107 year period, and the following bear markets, are easily seen. It is clear that a lot of money can be made – and lost – investing in stocks over the long run.
From 1904 to 1929 the Dow grew 12 times in value from 47 to 568 gold grams, then gave up 89% of that gain, ending at 64 grams in 1933. In the next phase, the Dow grew almost 14 times, to 893 grams in 1966. This was followed by a long decline, losing almost 96% of it's value, finally bottoming around 37 grams in 1980. Then the next bull market emerged, growing over 37 times to 1,393 gold grams in 1999. The 8 years following this all time peak have been a downward march, representing a loss of almost 56% to the August 31, 2007 close of 618.262 gold grams.
What will the future hold? I would love to hear comments from technicians on this topic… But if the last two market cycles are any guide, I suspect we will see the Dow trading below 200 gold grams sometime in the next 5 to 10 years, and it may not be until around 2035 that a new high is made.
There are many roads that could lead to the 200 gram level; the Dow could move sideways as the value of the dollar shrinks, or the Dow could keep making "new highs" in terms of a plummeting dollar, or the dollar could stabilize or even strengthen while the Dow collapses in nominal terms.
But if your goal is to build your real wealth, the key is to keep your eye on the ball: investing in assets that are growing in gold value, regardless of their price as viewed in the fun-house mirrors of fiat currencies. The Custom Chart service can help you identify those opportunities, and we will be bringing more tools online in the future as well.
More on A Long Look at the DOW
This chart doesn't try to show all the debts of the United States, just the publicly acknowledged debt of the federal government. So it doesn't include state and local debt, and it also omits unfunded liabilities (promises to pay in the future for things like medicare and social security). This is the number that grows each year by the size of that year's deficit.