September 26, 2026
CPI Under Scrutiny; Hard-Money Gauge Proposed
Economist Vasilii Sapozhnikov of the Mises Institute contends the most widely used inflation yardstick—the Consumer Price Index—misstates underlying price dynamics and misleads policy and investment decisions. He advances the ratio between the Dow Jones Industrial Average and the gold price as a more reliable gauge of real equity performance and purchasing power over time.
Sapozhnikov points to the latest mid-summer reading from the Bureau of Labor Statistics—July consumer prices up 0.1% month-on-month and 3.4% year-on-year—as an example of how small moves in the official index can mask more material shifts in relative asset values. In his framework, gold serves as a constant reference unit, and the Dow:Gold ratio (DJIA level divided by the gold price per troy ounce) tracks how many ounces of gold a share of the index can buy. A falling ratio indicates equities are losing value relative to gold regardless of nominal index levels.
Ratio Move Since 2023 and Cycle Implications
Sapozhnikov’s analysis asserts that, measured against gold, U.S. equities have declined by about 33% since 2023. The drawdown is captured by a lower Dow:Gold ratio, signaling that gold has outperformed the industrial average in real terms over this period. He frames the ratio as a cycle indicator and argues it offers clearer insight into the real purchasing power of equity holdings than currency-based measures.
Looking ahead, he outlines a bearish cycle view in which the next major market break could materialize by 2030. The timeline and magnitude are presented as his analytical judgment based on the behavior of the Dow:Gold ratio across cycles, not as a point forecast of nominal index levels. In this construct, further declines in the ratio would reflect continued erosion of equities versus gold, while a sustained turn higher would indicate an improving equity-to-gold exchange rate.
Market Context and Use Cases
The debate over inflation measurement remains consequential for asset allocation, risk management and policy assessment. For market participants comparing performance across regimes, the Dow:Gold ratio offers a simple, observable metric linking financial assets to a non-fiat benchmark. Its interpretation is straightforward: when the ratio falls, an equity claim buys fewer ounces of gold than before.
Sapozhnikov’s conclusions rest on the premise that gold provides a stable unit of account over long horizons, while official price indices are vulnerable to methodology shifts and compositional effects. Whether one accepts that premise or not, the recent ratio trajectory highlights the dispersion between nominal equity strength and real returns measured against hard assets.
For those tracking gold’s role as a store of value, allocated physical ownership provides direct exposure to the metal’s performance independent of currency indices and fund structures.
