While it has come in for a beating in May, briefly dipping below $1,200 an ounce on Monday down nearly $100 an ounce for the month, the gold price is holding onto 14% gains for the year.
Before the recent slump gold was enjoying it’s best start to a year since the early 1980s.
While recovering from a steep sell-off at the start of the year, US blue chip stocks haven’t been able to convincingly break through the 18,000 level it first breached at the end of 2014.
So is gold relatively overpriced against stocks?
This 50-year chart of the blue-chip Dow Jones Industrial index from Macrotrends suggests otherwise. The graph tracks how many ounces of gold it would take to buy the Dow over any given month going back to 1966.
In January of 1980 when gold in inflation-adjusted terms hit an all-time high of roughly $2,400 an ounce the ratio was 1.3 ounces and during the Great Depression it took 1.9 ounces to cover the Dow.
That compares to highs around 40 between mid-1999 and mid-2001 when gold reached lows of $250 an ounce.
When the nominal price of gold hit a record high above $1,900 in August 2011 the ratio was 6.4, but has now more than doubled to just under 15.
That means despite the exceptional start to 2016 gold is still cheaper than it was for the 24 years between May 1972 and September 1996 and on a relative basis it’s the cheapest since December 2007.