When stock prices drop by 20%, it’s defined as a recession. This, historically, happens roughly every seven years, and the average drop is 35%. Clearest in memory is of course the Great Recession just over a decade ago, where stock prices imploded and fell 57%. Just eight years before that, the dot-com bubble burst, and equity markets plunged 47%.
Since the Great Recession was at its worst, we’ve been in a bull market. In fact, the bull market has now lasted close to a decade, and markets are continuing to set new records—the Dow Jones hit new highs 73 times in 2017 and today stands at an all-time high of over 27,000 points), and the S&P 500 topped its previous highs earlier this week..
Gold is also performing quite well, having gained over 20% since the beginning of 2019 and beating both the Dow and the S&P hand over fist in gold’s price appreciation over the last 2 decades. This begs the question: From today, what will double first—gold or the Dow?
With the Dow’s gains, it’s not unrealistic to assume it could reach 30,000 next year. If we factor in a recession every seven years with a market drop of 25% (way below the average 35%), the Dow would not reach 50,000 until the year 2033, based on its 2017 value.
For gold, let’s assume an annual increase of around 11%—its average growth since 2000. Based on its 2017 spot price (just being ultra conservative here), gold would double in value by 2023, reaching $2,600. And that is a conservative estimate since we didn’t factor in the huge gains the precious metals has seen so far in 2019.
Considering these numbers, gold will double in value one whole decade before the Dow Jones. Will this information change the way you allocate your portfolio?
If you want to learn how you can add gold to your portfolio, schedule a free consultation with me, and I’ll walk you through how you can invest in precious metals.
About Kevin Troy
Kevin has spent over 16 years in the financial industry, focused primarily on precious metals as investment assets. He has published many articles on buying and selling precious metals along with the best entry and exit strategies for various financial assets. He has helped thousands of clients protect, preserve, and safeguard their investments with precious metals and has been with Gold Alliance for more than two years as a leading Sr. Portfolio Manager, overseeing a large portion of our clients’ portfolios.