SPX vs. Gold

The longterm SPX vs. Gold chart is just one more chart pointing to the eventual decline of equity value against the gold price. This means a bear market for equities, but a bull market for gold. Thus a formula for investors should be that your gold mining company has an outlook to paying dividends.

We are still working on an advancing ratio greater than +1:1 Gold vs. S&P, even though the chart itself hasn't been updated. My feeling on that is that the gains will be split between the advance of the gold price and the decline of the S&P. During the depression era, it was all due to the decline in stocks.

If you look at the depression era, the value of equities on the S&P fell precipitously once a longterm average vs. gold was reached, which suggests that a parabolic surge in gold prices may occur, but without a massive blow-off top as it had in the oil futures market-corner.

This would be consistent with a 3-wave extension.

source: http://www.ritholtz.com/blog/wp-content/uploads/2010/05/Gold-vs-SPX.png

-F6