How Much S&P 500 Can Be Bought with an Ounce of Gold?

This thought came to me today with the major move in equity markets, which is what has the long term relationship been between Gold and the S&P?  The Gold bugs had a great day too, and volatility dropped like a rock.  What does it all mean?

This is not so artfully “borrowed” from Barry Ritholtz circa May 2010.  Click on the chart to enlarge.

Gold Relative to S&P500 (1928-2010)

Nice additional commentary from Zero Hedge here with additional charts comparing the S&P/Gold ratio between the Great Depression and now.  Makes you wonder if we are to repeat history how we would get there.  Will gold go to 5,000, or will the S&P 500 drop to 250, or will they meet in the middle with a reversion to the 2009 March lows in the 600’s on the S&P while Gold rallies to 2,500 or so?  Seems inevitable that some combination will prevail at this point.  Certainly the markets returns are lackluster when converted out of USD into any for of currency that has held its own value.


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