The S&P to Gold Ratio has effectively traded sideways for the last few years. The ratio has now broken out to the downside. I would say that a 30-80% correction in the stock markets remains a threat despite Fed rescue efforts. I believe over the next several years that gold will outperform the s&p500. Contrary to popular belief, US stocks have not greatly outperformed Gold since 2015.
Jeff Gundlach of DoubleLine Capital in an interview from March 4th talked about the corporate bond bubble beginning to burst. He said the Fed would cut rates 50 basis points at the next FOMC. (They very well might cut before that.) He said he believes gold will go to a new all-time high. He also talked about how financial stocks in Japan are down 85% ever since they adopted zero rates 20 years ago. For that reason I think there's little reason to think that the SPX or the NASDAQ is going to bounce into a mega rally. I think there's a lot of reason to think that lots of money is going to flow into gold and silver.
Even in the worst case scenario - a 2008 style crash - gold will fall much less than stocks. Gold stocks may take a significant beating. For that reason it may be strategic to reduce mining exposure here and increase gold and silver exposure gradually.
The speed of the DXY 's fall the last 2 weeks tells me that it has the potential to fall a lot further if Fed Monetary policy expands tremendously. If that is the case, I don't think gold has much downside in this scenario versus 2008. But I think US indices as well as gold stocks have higher risk here. If the Fed is slow in cutting rates and never steps in front of the market until it crashes, then expect a 2008 type of event that may not be gold-negative.
Jeff Gundlach of DoubleLine Capital in an interview from March 4th talked about the corporate bond bubble beginning to burst. He said the Fed would cut rates 50 basis points at the next FOMC. (They very well might cut before that.) He said he believes gold will go to a new all-time high. He also talked about how financial stocks in Japan are down 85% ever since they adopted zero rates 20 years ago. For that reason I think there's little reason to think that the SPX or the NASDAQ is going to bounce into a mega rally. I think there's a lot of reason to think that lots of money is going to flow into gold and silver.
Even in the worst case scenario - a 2008 style crash - gold will fall much less than stocks. Gold stocks may take a significant beating. For that reason it may be strategic to reduce mining exposure here and increase gold and silver exposure gradually.
The speed of the DXY 's fall the last 2 weeks tells me that it has the potential to fall a lot further if Fed Monetary policy expands tremendously. If that is the case, I don't think gold has much downside in this scenario versus 2008. But I think US indices as well as gold stocks have higher risk here. If the Fed is slow in cutting rates and never steps in front of the market until it crashes, then expect a 2008 type of event that may not be gold-negative.
