The chart shows the commodities-to-stocks ratio over the past 47 years. This ratio compares commodities – as tracked by the S&P GSCI Commodity Index – with the benchmark S&P 500. The circles at the top of the chart show times when commodities have become extremely expensive relative to stocks. And the circles at the bottom of the chart show times when commodities have been extremely cheap compared with stocks. As you can see, this ratio has now fallen to an extreme rarely seen over the past five decades... You may recall the first... It was just before President Nixon took the U.S. dollar off the gold standard. Over the next several years, inflation shot higher... commodities soared... and stocks entered a brutal bear market. The second bottom occurred just before the final run-up in the dot- com boom. Again, over the next decade, commodities dramatically outperformed stocks. The broad GSCI Commodity Index rose nearly 300% from January 1999 through the end of 2007, while the S&P 500 gained less than 30%. iv In fact, it’s now even lower than either of the previous two bottoms...
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