Charting the UK stock market against gold since 1935
With the FTSE making new highs off the May lows and almost getting back to 6000, we thought it would be worth while to once again look at the FTSE:Gold ratio (the amount of ounces of gold it takes to buy the FTSE).
First up let’s take a look at what the UK stock market has done since 1935.
We can see that from 1970 the UK stock market rose some 1400% to peak in 1999. A level that some 13 years later still hasn’t been bettered. In fact we’re still some 6% from those highs today.
Now let’s take a look at the gold price over that same period of time.
So when we price the UK stock market since 1935 in ounces of gold this is what we get.
Now let’s zoom in on this chart an focus on the time period 2000-today.
We can also clearly see that since the end of 2009 the FTSE:Gold ratio has been in a clear downward sloping channel with the FTSE now at the top of this channel today.
So just how high would gold have to go to replicate the high in gold in 1980 when the UK stock market could be bought with just 1.2 ounces of gold. It would take a gold price today of around £4500, more than 400% higher than todays value.
So the next time you hear someone rave about how well the FTSE has done in the past few years it might be worth reminding them that it is still some 6% lower than where it was in 1999 and has fallen some 85% over the same period when priced in gold.
- FTSE:GOLD ratio collapses – UK stock market back to 1985 prices
- Gold price trades back around $1660 after yesterday’s stock market rout
- Six Securities now offer deliverable gold as payment to settle trades on Swiss stock market
- Presenting the FTSE:Gold ratio
- FTSE:Gold ratio nears lows in this bull run
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