Long-Term Trends
Growth Charts
Gold has trailed stocks, but outpaced bonds for more than 50 years
Gold miners have outperformed most asset classes since stocks bottomed in mid October, suggesting a short-term correction would not be unusual
Returns from Key Dates
Near term risks of a correction given gold has been the third best performing asset class, trailing only midstream energy and commodity futures, since markets peaked in January last year
U.S. Stocks-to-Gold Ratio
Priced in gold, stocks are yet to regain their Tech Bubble highs
Priced in gold, stocks are yet to regain Tech Bubble highs
Gold Vs. Monetary Base
Assuming the price of gold tracks global monetary base per capita over the long term implies expected returns over 6%
Market Trends
Yield Rates
Real yields (CPI), which historically have had a strong inverse correlation with the price of gold, are still deep in negative territory, albeit off the lows and trending higher
Based on TIPS-implied inflation, real yields have moved into positive territory
The recent move higher in gold may be explained by long-term real yields topping out as well as expectations that the Fed will pivot on short rates
Despite the intra-year volatility, longer-term returns for gold have been surprisingly consistent across multiple currencies
Gold has recently broken out to the upside against the GBP and the JPY, nearing breakouts in EUR, CNY, CAD; returns in USD less significant
Priced in U.S. stocks, gold still looks cheap
Miners vs Physical
Gold miners still look relatively attractive vs. physical
Spec positioning in gold futures has increased modestly over recent months, but nowhere near stretched, suggesting recent rally may have legs
Spec positioning in silver futures has increased modestly over recent months, but nowhere near stretched, suggesting recent rally may have legs
Gold futures market has continued to move deeper into contango (which is normal), implying increased carry costs
Gold-to-Silver Ratio
Despite recent rally, silver still appears attractively priced relative to gold
Historical Corrections
Gold’s correction following the post-COVID rebound remains within the range of historical drawdowns that occurred within bull markets
Stock Market Declines
Gold has had mixed, but generally positive, returns during stock market declines
Significant Market Events
Gold has had mixed historical returns during other significant market events
Gold Returns During High Inflation
Gold has a decent track record as an inflation hedge, but it is by no means a portfolio panacea during these episodes
Case Study 1
Stock Market Declines
Case study 1: gold returns during stock market declines
Case Study 2
Significant Market Events
Case study 2: gold returns during significant market events
Case Study 3
Rising Inflation
Case study 3: gold returns during periods of rising inflation
Appendix
Rolling Correlations
Correlation Matrix