Dow at 20,000 – Really a Record High?

Turning on the TV, every station covers our Dow hitting a record high. “Trump rally pushed it up over 20,000.” On paper, it is indeed the highest ever.

But, is it really a record high?

Let me try to put this economic rally in perspective. Since 1982, our Dow is up 20x, an impressive statistic. In reality, not many have had money allocated into equities since 1982. I calculated some “real” Dow to purchasing power values since the year 2000.

“Real” Dow Purchasing Power

If you were to sell one Dow share in 2000 and immediately use those funds to purchase barrels of oil, you would have received 852 barrels. Now, at 20,000 Dow, you would have received 374 barrels. A 56% loss of purchasing power.

Now let’s compare silver. In 2000, for one Dow share, you would have received 2,256 ounces of silver compared to 1,065 today. Yet another decrease over 50%.

Finally, A Gold Comparison.

In 2000, you could have sold one Dow stock and received 45 ounces of gold. Today you would receive less than 14 ounces of gold – nearly a 70% drop.

To be clear – I am not trying to damper our market’s recent success. Preaching diversification for years, I have money in our markets. I like seeing the 20,000 number. Since we typically recommend placing 10-15% of assets in gold and silver, the remaining 85-90% are in dollar-based investments. I constantly remind clients and advisors: we do not want our gold and silver prices to move up. Often, gold and silver rise, because our other assets have transferred either their paper value or purchasing power to gold and silver.

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