American economist says ‘U.S. stocks are in a historic bear market'

Economist Peter Schiff contends that U.S. equities are in a historic bear market when measured against gold, despite nominal dollar-denominated highs, noting the Dow Jones (in gold) fell over 24% in 2025 and approximately 70% since 2000. This perspective highlights inflation's distortion of stock gains, contrasting with gold's nearly 44% year-to-date surge to record highs near $3,800, reinforcing its safe-haven role amid monetary easing and suggesting investors may be overlooking real market weakness.

Analysis

Economist Peter Schiff presents a starkly bearish case for U.S. equities, arguing that a historic bear market is underway when measured against gold, despite major indices reaching new highs in nominal dollar terms. This perspective is supported by the claim that the Dow Jones Industrial Average, when priced in gold, has declined by over 24% in 2025 and approximately 70% since 2000. The core of this argument is that persistent inflation, fueled by loose monetary policy and significant government debt, is distorting the true performance of stocks, with nominal gains failing to keep pace with the decline in the U.S. dollar's purchasing power. In stark contrast, gold has demonstrated significant strength, rallying nearly 44% year-to-date to a record high near $3,800, which proponents view as a direct reflection of eroding confidence in fiat currency and a flight to hard assets. This alternative valuation framework suggests that the apparent wealth creation in equity markets may be an illusion, and the strongly negative sentiment associated with major ETFs like DIA and SPY reflects this underlying risk of real value erosion.

Key Decisions for Investors

• Investors should critically evaluate their equity exposure in real terms, not just nominal dollar value, and consider allocating a portion of their portfolio to hard assets like gold as a hedge against inflation and currency debasement.
• It is prudent to monitor the Dow-to-Gold ratio as a key indicator of the real performance of equities, as a continued downtrend would validate the bearish thesis even if dollar-denominated indices climb higher.
• Long-term investors heavily concentrated in U.S. equities should reassess the impact of ongoing Federal Reserve easing and fiscal deficits on their portfolio's future purchasing power.