Tuesday, May 3, 2016

Gold vs. Stocks: Trend ratios looking exactly like 2007 just prior to financial collapse

Contrary to the year of the financial EVENT in 2008 that changed the global economy forever, the circumstances behind the Credit Crisis started in 2007 with the collapse of the housing bubble, and the apex of the six year equity Bull Market.  And one thing it also triggered was the beginning of the next leg of the Bull Market in gold, which would move from the $700's to a new all-time high of over $1900 in a short period of time.

There are many things that act as warnings and signposts for future events, and one of these has occurred since the beginning of the year which parallels 2007, and the beginning of events that led to a worldwide financial collapse.

The ratio between gold growth and stock market declines.


As you can see on this chart, the 2016 performances of both gold and the S&P 500 are exactly the same as the performance of each back in 2007.
Gold is enjoying an incredible year, surging 22 percent as the S&P 500is barely positive. What's rare is for the yellow metal to outperform the market so dramatically in a year when stocks are up. 
In fact, going back to 1980, there has been only year in which gold has outperformed the S&P by 20 percent or more while the latter was positive on the year: 2007. 
Both gold and the fear-measuring CBOE Volatility Index surged in the second half of that year, even as stocks maintained their footing. The crash, of course, came in 2008. - CNBC

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