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⚠️CHART OF THE WEEK: Will the gold outperformance of the S&P 500 continue for years?

Food for thought regarding gold and the S&P 500 relative performance

Author

Global Markets Investor
March 01, 2025

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Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, recently presented a pretty interesting analysis about gold and the S&P 500.

He pointed out that in the past, when the S&P 500 relative to the market capitalization had reached extremely high levels, then gold had outperformed the index over the next decade. Such phenomenon had occurred in the 1970s and the 2000s following the Dot-Com Bubble burst.

Notably, the outperformance may take a few different forms:

  • gold rising, stocks falling

  • gold rising, stocks remaining relatively flat

  • gold rising, stocks rising at a slower pace

  • gold remaining relatively flat, stocks falling

  • gold falling, stocks falling at a faster pace

Having said that, keep in mind the 1970s had been one of the best periods for gold prices in history while in the 2000s gold had posted 12 years of consecutive gains.

At the same time, the S&P 500 had seen some rough years in both mentioned periods, mixed with some decent recoveries.

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Zooming the analysis, the chart below presents the S&P 500 versus gold on a shorter time frame as well as Bitcoin versus gold.

As we can see, the S&P 500 versus gold have peaked in early 2024 (or maybe even in early 2022) while Bitcoin versus gold may have topped in December 2024.

If history is any guide, we can expect gold to outperform the S&P 500 for years to come, and to outperform Bitcoin over the next 12 months.

Last word, we learnt a few weeks ago, the US stock market to GDP ratio is hovering at over 200% near a record, making the analysis as timely as ever (more details in the second article linked below).

!?️Is this a time to be cautious about gold?

Short-term and long-term perspectives for the world's most desired metal.

globalmarketsinvestor.beehiiv.com/p/is-this-a-time-to-be-cautious-about-gold

⚠️The US stock market is priced in for perfection and almost every investor believes in it

The next important test for the markets is coming during the last week of January

globalmarketsinvestor.beehiiv.com/p/the-us-stock-market-is-priced-in

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