Median Gold Valuation as of 6/1/23: $3,969/60 USD / troy oz

Median Silver Valuation as of 6/1/23: $180.05 USD / troy oz

Dow Jones Industrial Average to Gold Ratio

Consider the Dow Jones Industrial Average (DJIA) to gold ratio. We will denote this by DJIA/G. This is just the ratio of the DJIA to the spot price of gold at a point in time. The DJIA is a stock market index that tracks thirty large publicly-owned blue chip companies that trade on the New York Stock Exchange (NYSE) and the NASDAQ.

Looking at a historical chart of the DJIA to gold ratio for the last 100 years (make sure you look at maximum time frame and turn off the "Log Scale"), we will assume the average historical DJIA to gold ratio is DJIA/G = 10. Therefore G = DJIA/10.

As of the date of writing, the DJIA is approximately 30,179.05. Therefore, a valuation for gold is G = 30,179.05/10 = $3,017.91 / troy oz.

We can do a similar valuation for silver. Looking at a historical chart of the DJIA to silver ratio for the last 100 years (make sure you look at maximum time frame and turn off the "Log Scale"), we will assume the average historical DJIA to silver ratio is DJIA/S = 400. Therefore S = DJIA/400.

Therefore, a valuation for silver is S = 30,179.05/400 = $75.45 / troy oz.

Note that there is also a DJITR. The DJITR, "TR" for "total return", is the DJIA but with dividends reinvested over time. As of the time of writing, the DJITR is 69,789.65. Using this value and keeping the average ratio the same (which is not realistic, but just as an approximation), we obtain a valuation for gold of 69,789.65/10 = $6,978.97, and a valuation for silver of 69,789.65/400 = $174.47 / troy oz. We just wanted to mention the DJITR, because it can be viewed as a more realistic DJIA, and that would give larger valuations for gold and silver.

One can also look at other time frames. For example, look at the average DJIA/gold starting from the time when gold standards were no longer in use.



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