SUMMARY
- Gold recently achieved a new all-time high, surpassing $2,100/Oz on March 5, and potentially signaling a bullish phase. However, caution remains largely due to the ongoing downtrend in the gold/S&P 500 ratio and gold’s current position in an unfavorable phase of its 8-year cycle.
- When the gold/S&P 500 ratio is above its 200-week moving average, it has historically been considered favorable for gold and vice-versa. Gold has in the past performed much better when the gold/S&P 500 ratio is above its 200-week moving average with a hypothetical gain of 1,391% for $1 invested since 1975. Conversely, when the gold/S&P 500 ratio is below its 200-week moving average (as it currently is), the hypothetical net gain of $1 invested in 1975 is -21%. There is also evidence that gold has for many years been operating on an 8-year cycle: 4 favorable years, followed by 4 unfavorable years. The next favorable period will start on January 1, 2025.
- Despite these cautionary signs, the overarching advice is to follow the trend and maintain a bullish outlook as long as gold stays above its breakout level, though a fallback below this level would suggest a reassessment.
DISCLOSURES
The material shown is for informational purposes only. Any opinions expressed are current only as of the time made and are subject to change without notice. This report may include estimates, projections or other forward-looking statements; however, forward-looking statements are subject to numerous assumptions, risks, and uncertainties, and actual results may differ materially from those anticipated in forward-looking statements. As a practical matter, no entity is able to accurately and consistently predict future market activities. Additionally, please be aware that past performance is not a guide to the future performance of any investment, and that the performance results and historical information provided displayed herein may have been adversely or favorably impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be inferred that these results are indicative of the future performance of any strategy, index, fund, manager or group of managers. The graphs and tables making up this report have been based on unaudited, third-party data and performance information provided to us by one or more commercial databases. While we believe this information to be reliable, SpringTide Partners bears no responsibility whatsoever for any errors or omissions.
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