Skip to content

S&P 500 returns since 1971 rely on dividends to beat gold


  • The US stock market index has not progressed since 1971 if you denominate the index in ounces of gold rather than dollars.
  • This is true but neglects the role of dividends in driving stock market returns.
  • Including dividends, the total stock market return is close to 4X that of gold.

S&P500 Index Denominated in Gold:

Anthony Pompliano makes the claim on Lex Fridman’s recent podcast (53 mins in) that the US stock market is down since 1971 if you denominate it in gold rather than in US dollars. This is true if you look at the value of the S&P 500 index, here denominated in ounces of gold:

Figure 1

Notice how – when denominated in ounces of gold – the S&P index is down significantly compared to the dot com bubble in 2000 and about equal to its level back in 1971.

Anthony Pompliano’s main point is that it’s not so much that stock prices have increased but that the US dollar has been devalued. This is true, but omits the important role of dividends in driving stock returns.

S&P500 Index Denominated in Gold – including dividends:

Here is the chart when dividends are included to give an S&P500 total return index, still denominated in ounces of gold:

Figure 2

This chart of total return includes continuous reinvestment of dividends earned back into the S&P index. Including dividends, the S&P500 now shows a return of 4X since 1971 when denominated in gold (compared to about 1X without dividends). However, the index – even including dividends – is down compared to 2000 when denominated in terms of gold.

In Conclusion:

Much of the appreciation in the stock market reflects a loss in value of the US dollar. Anthony Pompliano makes a good point this regard. However, when dividends are included, stock markets have outperformed gold by 4X since 1971.

A further technical note:

In practise there are taxes on dividends unless the stock index is held in a tax free retirement account. This means that – outside of retirement accounts – the return on the stock market since 1971 is in fact between 1X and 4X.

Data Sources:

Monthly data for the S&P index and dividends is taken from Robert Shiller.

Monthly data for gold is taken from


Leave a Reply