S&P 500 Valued in Gold Still 66% Below 2000 Peak
Some opinions suggest that the U.S. stock market peaked 26 years ago; when valued in gold, the S&P 500 is still down 66% from its 2000 peak and is below the level on the day Nixon closed the gold window.
This perspective emphasizes that measuring in dollars obscures changes in purchasing power, arguing that real returns need to be repriced using hard assets like gold.
Funds are reassessing allocations between nominal currency bull markets and hard asset relative performance, benefiting long-term holders of gold and inflation-hedged assets, while the narrative of pure nominal dollar returns is under pressure.
Source: Public Information
ABAB AI Insight
At the peak of the 2000 tech bubble, the S&P 500 reached a historically high ratio when priced in gold; since then, gold prices have surged significantly, while nominal stock gains, though high, have lagged considerably relative to gold, creating a long-term divergence of "nominal new highs, actual pullbacks."
On the capital path, excessive issuance of fiat currency and low interest rates have inflated nominal asset prices while eroding the purchasing power of money; if investors only account in dollars, they will overestimate the real appreciation of stocks, leading resource allocation to favor stocks and growth assets while neglecting gold as a long-term value metric.
A similar path can be seen during the stagflation period of the 1970s: nominal stock performance was mediocre or even increased, but it fell significantly when priced in gold. Current discussions are still in the "accounting unit dispute" phase, with hard asset proponents and long-term stock advocates in ongoing opposition.
Essentially, this is a transfer of pricing power: when the currency itself depreciates, the real pricing power of assets shifts from nominal fiat prices to relative ratios with hard assets.
ABAB News · Law of Cognition
The measure you use determines the rises and falls you see.
Nominal new highs can obscure actual purchasing power pullbacks.
After the closure of the gold window, the relative prices of currency and assets have never returned to their original point.