Loading ...Rising Stock Markets & Gold
Unfortunately I can’t see Rambus thoughts on whether PMs and PM stocks can do well if the global stock market rises. However, here’s a quick glance at the worlds largest gold miner, Barrick and the S&P going back a good number of years. If global stocks rise, and PMs are due to outperform, that’s very good news for us here in the ‘tent’
Elliot Wave analysis is pointing to a large correction in the general markets coming up over the months ahead even if new highs are made … Both Avi Gilburt and Sid Nelson point to this.
Well, if true, that may not be good for PMs. The 2 large drops in the S&P in the chart above (2000-2002, and 2008) were accompanied in the first case by only a small rise in gold price and in the second, a substantial drop.
The Dow:Gold ratio is already pretty high up now at around 20. *IF* the expectation is that this ratio will approach 2 before a gold bull is over,then gold will have to reach very high highs if Rambus is also correct that equity markets are in a long term bull. According to this link, the ratio has gone up to 40 during the dotcom bull but if we continued in that direction, the entire gold bull thesis would be put into question imo. My guess is that equities, in a bull or not, would have to strongly under-perform gold. Just thinking out loud here and trying to divine the future a bit.
https://www.longtermtrends.net/dow-gold-ratio/
Given the long-term extreme valuation of the stock market, the best case scenario is it is now where it was in the early to mid 1960s, where it grinds higher amid increasing inflation. Expected returns over the next 10 years at best case are 3%/yr and thats exactly what S&P did most of the time you pick 10 years forward from 62-65.
At present, PMs could trade higher with the stock market but there is no big breakout and big bull market until S&P rolls over and Fed starts cutting. Global stocks going up is not good for Gold.
Possibly, but 10-15 years ago, the S&P rose by 50% and gold did extremely well, with the miners going up by hundreds of percent and outperforming the rise in global stocks by a mile. I don’t really see why that can’t happen again.
The catalyst for that move was a bear market, rate cuts and falling real rates. Gold & Stocks sometimes rise together after end of a bear market in stocks.
The situation now is not like the early 2000s yet. Fed hasn’t cut and stock market still rising. No recession either.
Northstar … all the ingredients are ripe for gold/silver/agriculture/inflation to rise higher (and they have been showing signs of this since early 2016). Patience will pay off. In the meantime, uranium’s continue to offer an amazing risk/reward opportunity, which has been showing it’s hand in the last few months because of the section 232 decision. Hold on tight!