The Dow-to-Gold ratio (DJI/XAU) measures how many ounces of gold are needed to buy the Dow Jones Industrial Average. It is used as a long-term indicator of monetary confidence, where a falling ratio shows a shift in real value away from paper assets (cash, bonds, stocks) towards tangible assets like gold, silver, platinum, palladium, rhodium, copper (metals), oil, lumber (energy), and real estate.
Dow-to-Gold Ratio (DJI/XAU) from 1897 to 2025 (quarterly bars, log scale; chart credit: Francis Hunt.)
Although the Dow
has gained roughly 250% in dollar terms since 2000, by Q4 2025,
its real
value has declined by about two-thirds when measured in gold.
Over
the last century, the Dow-to-Gold ratio has oscillated between periods
of equity confidence and monetary stress. In 1929, the ratio peaked at
roughly 18.63 before collapsing below 2 during the Great Depression. It reached about
28 in 1966, then fell below 1 in 1980 amid high inflation and currency
instability.
At the 1999–2000 peak, the Dow equaled approximately 45 ounces of gold—its highest in over a century. As of October 2025, the ratio is near 12, a decline of about 73% from that peak. The drop was steep from 2000 to 2011 (reaching a ratio near 6), followed by a rebound to about 20 by 2018, and renewed erosion thereafter. Over that period, gold has outperformed equities in real terms.
