Loading ...US stocks vs gold
It’s hard to believe, but the Nasdaq has continued to make higher highs vs gold for the last decade. Even after the Covid crash, gold has failed to outperform the Nasdaq, and the Nasdaq actually made a higher high vs gold after the Covid crash.
The S&P vs gold ($spx:gld) hasn’t done quite as well, but it is on the cusp of breaking out to multiyear highs, as seen below. Perhaps it forms a double top with the April 2021 peak if we are lucky? But I wouldn’t count on it.
After the Covid-crash, it looked like gold’s long term trajectory vs the US stock market was set, but that initial impression was completely off base. It is pretty clear that US stocks will nominally outperform gold until a complete collapse occurs. But who knows when that will happen, as the Fed and world central banks have managed to kick the can down the road for decades now. It seems all excess liquidity will continue to flow strongly into US stocks. On a risk-adjusted basis, the comparison is even more in favor of US stocks, especially the mega-tech stocks which now have monopoly positions thanks to cheap money.
To me, it is unbelievable (and rather depressing) that the monetary metals have performed so poorly on a relative basis. Every time I think “this time is different”–it isn’t. Look at the scoreboard.
[Eh, maybe I am being a little too negative here, and my frustration is a contrary indicator. But just look at that post-Covid crash rally in the stock market vs gold. I mean, what the actual? lol.]
gold is not tied to currency anymore since the window closed . It is just a commodity in a very very small market. It sits hidden away in the sock drawer and has zilch excitement. Cures for cancer, fast cars, innovation, now there’s excitement thus better opportunity for trading .
“It is pretty clear that US stocks will nominally outperform gold until a complete collapse occurs. ”
I track that ratio regularly. And I will get signals automatically since I have a synthetic ticker for it in my system.
Moreover, my charts appear to confirm your outlook. Although gold might do so with a lag as in 2008. IIRC, the equities crash occurred in Sept and Oct. Gold got life in late Nov with some fierce one day moves. Even then, the pivotal policy moves that gold anticipated didn’t show up until 4-5 months later.