Friday, October 9, 2009
I have drawn a 1% trend line on the chart for no particular reason, other than it seems to fit. If the line makes any sense at all, it is that financial asset prices (note that the S&P 500 index throws off a couple percent in dividends each year which are not included in this chart) tend to outperform the prices of physical things by about 1% a year on average. That's not strange, since financial assets represent a claim on productive assets, while gold is merely a proxy for tangible assets (land, commodities, etc.).
Posted by Scott Grannis at 11:41 AM