The opposing trends in the Dow and gold over the last 2 years have doubled the Dow-gold ratio from its 2011 low to around 11 today:
Another delve into demographics reveals that the US Middle / Young ratio topped and bottomed historically very closely with the Dow-gold ratio (click charts to view larger):
The demographic data points in the chart are 5 -yearly but a more detailed view of the M/Y ratio for the USA reveals a flattening from 2014-2019 and a true bottom and pick up from 2019. That would suggest a bottom for the Dow-gold ratio in that 5 year window, but with a bias towards 2019. However, ‘secular’ bull markets have typically historically peaked around solar maxima, which could bring the bias back towards 2014 (if the solar peak is this year).
Drawing in the other key demographic measures of Middle-Old ratio and Net Investors, the correlation is reinforced:
However, the projected window for a Dow-gold ratio bottom widens to 2014-2022 (again viewing more detailed data than my 5-yearly above). Furthermore, from here forwards we see much flatter and also divergent demographics which may potentially spell a new era, in which more balance between gold and equities is maintained, with less wild swings between the two.
The UK FTSE-gold ratio history looks like this:
The UK demographics look like this:
The FTSE-gold top around 1965 matches the demographics top. The FTSE-gold bottom 1975-1980 matches the demographics bottom. The FTSE-gold ratio topped in 2000 around 5 years before the demographics topped, and I would suggest the US influenced this. The bottom for UK demographics is from around 2020-2025.
Adding China, Japan and Germany to the USA and UK into a weighted model (by GDP and stock market cap) also pushes the demographic bottom out to around 2025, but again divergent and flatter trends put a question mark over that point and thereafter:
Drawing all together, I would suggest the likely window for the Dow-gold ratio to bottom is 2014-2025. As ‘secular’ bulls historically have ended close to solar peaks, then I would refine that and suggest the likely bottom for the Dow-gold ratio is either 2014 OR 2025 (based on solar peak projections of this year and around 2025). If the middle-young ratio is the more dominant demographic ratio for stocks-commodities then 2014 is more likely, both by US and weighted-composite demographics. However, gold would need to take off soon (and/or the Dow collapse) to enable that. Either way, going forward we might expect less long and less wild ‘secular’ swings in the battle between gold and stocks, based on flattening and divergent demographics ahead. We might rather find alternating cyclical bulls and bears between the two.