Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

Re:Show HN: M1 Chart – The stock market adjusted for the US-... by eloff on Saturday February 13, 2021 @08:45PM (#26128922)

Here's the S&P 500 in "real money" that is, gold, over the past century: https://www.macrotrends.net/1437/sp500-to-gold-ratio-chart

I was looking at that earlier today to try to get a feel for if the stock market is really at record highs, or if it's just the Dollar and other major currencies that are just at record lows.

Note, that massive crash on the chart after 1971 is the US abandoning the gold standard (where you could exchange US dollars with the government for a fixed amount of gold) and the massive devaluing of the US dollar, and massive surge in the price of gold that followed.

But I thought the most interesting part is it clearly shows we're not at 2000 bubble levels right now. Which it looks like we are if you just look at the dollar denominated stock market value.

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Re:Show HN: M1 Chart – The stock market adjusted for the US-... by fny on Saturday February 13, 2021 @09:13PM (#26129061)

But this isn't accurate either. Gold is highly correlated with interest rates. Why would I want to hold a rock that yields nothing if there are bonds that yield a real return?

As of now we haven't hit a regime of negative real yields on long dated treasuries in the US. After being at ZIRP for decades with new inflation fears, I'd bet gold will continue to be punished as yields rise, so you may never see that same signal from Y2K.

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Re:Show HN: M1 Chart – The stock market adjusted for the US-... by jkhdigital on Saturday February 13, 2021 @09:30PM (#26129141)

Gold has no yield (more like negative yield, due to carrying cost)... but also has no counterparty risk. Gold is an interesting option when real yields suck, but the real purpose is to preserve some semblance of wealth when the sovereign becomes insolvent.

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Re:Show HN: M1 Chart – The stock market adjusted for the US-... by tylerhou on Saturday February 13, 2021 @09:49PM (#26129214)

The counterparty risk is that when the sovereign becomes insolvent, people won’t want to buy your gold because they’d rather have food and water.

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Re:Show HN: M1 Chart – The stock market adjusted for the US-... by vijayr02 on Saturday February 13, 2021 @11:02PM (#26129559)

I think the risk when the sovereign goes insolvent is a bunch of people with guns turn up and take your gold away. Sometimes the insolvent state and the people with the guns may even be the same.

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Re:Show HN: M1 Chart – The stock market adjusted for the US-... by eloff on Sunday February 14, 2021 @12:14AM (#26129878)

Stocks are highly correlated with interest rates too. For the same reason.

I think it's a pretty reasonable look at the value of stocks in something tangible.

Maybe you could compare the stock market to the price of a gallon of milk or something, but gold is a fairly natural choice.

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