COTW: Gold Performance

March 6, 2024COTW: Gold Performance

  • 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.


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