SPX/Gold Ratio, Big Picture

There are all sorts of little pictures happening on the fly in the markets right now. These little pictures are happening in concert and will inform the big picture soon enough. We are managing those closely.

But sometimes it is helpful to just back off and view the larger situation. Here are a couple different monthly views of the Good Ship Lollipop (GSL) vs. Gold (the GSL/Gold ratio, ha ha ha). Cyclical and hopeful vs. counter-cyclical and as defensive as you can get, monetarily-speaking.

This was Amigo #1 in 2018’s cartoon-like macro shtick (#2 was the 30yr bond yield, which arrived at the limiter a year ago, causing much macro hysteria in both directions, and #3 was the Yield Curve, which has also whipsawed players of late). But Amigo #1 was #1 for a reason and that is because I think it is the most important signpost to macro change or, obnoxiously, macro sameness (could the GSL sail on?).

SPX/Au stopped right at our long-held target, with the caveat of a higher gap from 2005 that could fill if joy and happiness sweep the land. There is another gap lower from 2016 that could fill if the opposite comes true and the entire post-election reflation trade in stocks is taken back. Just for fun (I really don’t take these things too seriously) a Diamond consolidation pattern is drawn in with the GSL/Gold ratio below its lower trend line.

spx gold ratio

Here is an alternate of the same chart showing that the post-2011 bull phase did tick a 38% Fib retrace of the 2000-2011 decline in stocks vs. gold. That was the minimum requirement.

spx gold ratio

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