posted on Jun, 28 2011 @ 12:56 PM
Hey hawkiye, this must be bekod's first barbecue
Gold has corrected -10% since the end of April vs corrections of -18% in 2003, -27% in 2006 and
-32% in 2008. People that listened to the chicken little[s] back then were left standing on the platform clutching a fist full of fiat watching the
Gold train roar by...wishing they could turn back the clock....but they can't...they're out.
The S&P:Gold Ratio measures the value
of the S&P index against the price of Gold.....across time. Here's a
showing the ratio from the Gold high in Q1 1980, through February 21, 2011
when Gold closed at $1400.
And here's some of the text that comes with it:
S&P 500 vs. Gold Price
February 21, 2011
Over the last 35 years, the relative price of Gold1 and the S&P 5002 has oscillated up and down very significantly. In the aftermath of 2008 and the
financial crisis, this ratio has regressed toward a value of 1.0, which indicates equal valuation for the S&P 500 index and an ounce of gold. In the
latter half of 2010, the S&P 500 vs. Gold ratio dropped below 1.0 as Gold prices were pushed up by speculators seeking to hedge against expected
future inflation. Our analysis indicates that this trend is likely to continue through 2011 as monetary expansion inflates both asset classes.
If the economy slips back into recession from monetary tightening or the cumulative impact of additional government taxes and regulations, we expect
to see the S&P 500 price move significantly below the price for gold. Conversely, we anticipate that the S&P 500 will resume a growth trajectory
relative to gold when the economic and political conditions become more favorable for expansion. At present, these conditions are not likely to
transpire in 2011, and may take until 2012 or longer. - Full text
In a nut shell, when the ratio is rising the S&P is outperforming Gold, when the ratio is falling Gold is outperforming stocks. When the ratio reaches
1, one ounce of Gold will buy 1 share of the index. As of yesterday's close the ratio was at 0.86. Across the past 30yrs the winner is Gold.
edit on 28-6-2011 by OBE1 because: Math - 30yrs