Contrarian Indicator Tripped: Stocks Beating Gold By Widest Margin In 13 Years

“By one measure, gold is trailing stocks by its widest margin in 13 years, and some market watchers expect the trend to continue….”

On the surface, this article casts the yellow metal in a bad light.

The mainstream pushes this narrative, and the sheeple buy into it.

But reading between the lines, and what is it saying?

That this is about as good as it gets for stocks, and about as bad as it gets for gold.

Here’e some of the CNBC article to which I’m referring (bold added for emphasis):

By one measure, gold is trailing stocks by its widest margin in 13 years, and some market watchers expect the trend to continue. The ratio of the S&P 500 to gold has touched its highest level since mid-2005, according to an analysis of the popular S&P 500-tracking ETF (SPY) and a gold-tracking ETF (GLD) from Pension Partners. In other words, stocks are outperforming gold by a wide margin.

They even include this V-shaped chart:

Let’s get back to one more excerpt from the article, just to solidify the validity of the indicator (bold added for emphasis):

Gold has been a tough one. The reason is that it’s held its own over the last few years, the problem is that we’ve been at these points before. Each time, we’ve failed. I think there’s no real rush to buy gold, because think about how many other asset classes have been doing well, outperforming, even making new highs,” Frank Cappelleri, head market technician at Instinet, told “Trading Nation” on Tuesday while examining a chart of the GLD.

Here’s the things about contrarians, and value investing in general.

You’re wrong before you’re right.

Sometimes it takes much longer than anticipated.

Lord knows the last seven years haven’t been easy.

But now, at such an extreme level, we’re right at the turn where gold & silver will start outperforming.

It’s only a matter of time.

Stack accordingly…

– Half Dollar


About the Author

U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at Paul’s Twitter is @Paul_Eberhart.