"Reversion to the mean is the iron rule of financial markets."
-John C. Bogle
The gold price has some serious catching up to do, and will likely start the next leg higher as soon as the Fed is forced to pause its rate hikes. Gold miners will outperform in this scenario...
Gold is set to outperform equities as soon as the Fed pauses rate hikes in the coming months. Now is the time to back up the truck on physical gold and the miners and enjoy a multi-year run...
Here we have an extremely similar setup to late 2015, right before the junior miners went on an epic tear. Note the divergence in the dynamic RSI oscillator, and how similar the action now is to 2015. The ratio also just broke out against the S&P.
Are you loaded up for this run??
Here you can see the ratio of XAU (an index of 30 precious metal mining companies) to the S&P 500 compared to the yield on the US 10 year treasury (orange line). As you can see, we have been in a falling rate environment ever since Volcker jacked up rates in the early 80s and put a floor under the value of the Dollar. XAU/SPX has followed the treasury yields down...
This is a fascinating chart. Since 1985, the NASDAQ 100 Index has been consistently outperforming the S&P 500 except for 2 years following the bursting of the Dot.com Bubble.
Also of note is the well-defined downtrend line that has been tested several times in the past, and is currently being tested again. The ratio is currently near the same level that marked...
The gap from September has now been filled, and the index is finding support against it's 200 DMA again. Good low risk entry point here on a diversified play in one of 2022s most attractive sectors. Good uptrend on the RSI as well.
The total savings in US accounts as a percentage of disposable personal income saw an incredible spike during the lockdowns as "helicopter money" and "stimmy checks" flooded the bank accounts of consumers, fueling an awe-inspiring comeback in retail sales. Unfortunately, however, the data shows that not only is all of this stimulus money gone (along with the...
Pre-Global Financial Crisis, oil outperformed gold on a relative basis as the global economy was able to expand and there was little perceived need for a safehaven asset. However, the chart shows a clear paradigm shift after the near collapse of the global financial system, which significantly reduced near-term energy demands while also encouraging flows into the...
The commodity basket to S&P ratio just formed a textbook double-bottom. The ratio also has a very similar momentum setup to the peak of the Dot.Com Bubble on both the RSI and 7 yr Rate of Change indicators. We look to be starting a true secular bull market in real assets that could be sustained throughout the decade.
The chart shows that financial assets have...
Looking at BTC charts measured against the USD is confusing since the value of the dollar fluctuates significantly. This is like trying to measure your height over time, but the measuring tape keeps shrinking.
Instead, look at a ratio of Bitcoin against the MUCH less volatile store of value, gold. Here we can see very well defined tops and bottoms for the various...
The bond market often has an inverse relationship with the stock market since it is considered a 'risk off' asset. Bonds generally yield more interest for longer maturities. For example, a bond investor in a healthy economy would expect a greater yield for a 10 year treasury compared to a shorter duration. However, the yield curve can 'invert' (shorter term bond...
The chart says it all. "Don't fight the Fed" works both ways. They are currently wrapping up the biggest QE, have multiple rate hikes planned for the year, and have even talked about reducing their balance sheet, which is QE in REVERSE!!!
The over-valued stock market will falter, and the Fed will have to choose between rescuing the stock market or the value of...
We have a similar setup to the dot.com bubble peak forming currently in the S&P 500 to crude oil price ratio. This ratio can be thought of (the value of financial assets) / (the value of real assets) since energy prices are so influential on the manufacture, mining, and shipping of almost all real goods. The analog shows that the stock market should have already...
This mining explorer has been beaten up lately on lack of news and political uncertainty in Peru. It put in a reversal candle today and bounced off of the Fib retracement level. Adding to my position here to get leverage on the impending breakout in silver.
The Gold:SPX ratio has but in a double bottom on the monthly chart, indicating a likely short-term top in the US equities market and/or a re-test of the August 2020 highs for gold. If there is a broader market sell-off and deleveraging that brings all assets down a bit, that would be an excellent and extremely low-risk time to load up on quality gold and silver...
"History doesn't repeat itself, but it often rhymes." -Mark Twain
Here is a macro view of the Gold:Dow ratio, which normalizes the price of a popular alternative investment relative to the strength of the market. When this trend is going up, gold is outperforming the market. Conversely, a downward trend means stocks are outperforming the metal.
Where is this going next?
