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Gold Beats the S&P 500


Sign that yellow metal is best hedge against coming inflation.

Spot gold rose $5.63 to $913.25 yesterday - a new closing high for the move since the September low.

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For those keeping score at home, that means the gold price is now above the price of the SPX (909.92) for the first time since having fallen below it in the summer of 1990.

The last time we saw the dollar price of gold rise above the SPX after a long period of being below it was in summer of 1973, after which the price of gold more than tripled over the next year. The gold price would then remain above the SPX price for 17 years, ending in the summer of 1990.

Click to enlarge

Will we see something similar this time around? (i.e. Will gold tend to outperform stocks for the next decade or so, as it did after the summer of 1973?)

I suspect that's going to be the case, given the long-term nature of the big secular bear market in stocks that began back in 2000 in "real" terms, and the big secular bull market in gold that began in 1999.
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No positions in stocks mentioned.

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