Another Gold Chart…
It’s not easy to find cheap assets to buy right now…
Stocks have been in bull market mode for several years. One thing that is flashing value is the gold-to-silver ETF ratio.
Today, I’m going to walk you through another gold chart. It’s just another way to compare how cheap one asset class is relative to another asset class.
This is important because I’ve talked a lot about selling what’s expensive and buying what’s cheap. To be successful doing that, we need to know when assets are selling at high prices and how to find assets that are selling at cheap prices.
Let’s look at gold’s performance relative to the S&P 500…
This ratio compares the performance of the SPDR Gold Shares ETF (GLD) to the SPDR S&P 500 ETF (SPY) since early 2006. (The blue line is the average.)
This kind of comparison shows us either the outperformance or underperformance of one asset relative to another asset. For example, a rising line means gold is outperforming stocks and a declining line means the opposite.
As you can see, gold has been underperforming the S&P 500 index since 2011. Which was the start of the gold bear market. (As I explained yesterday, the gold-silver ratio indicates a new gold bull market began last year.)
Right now, the GLD-to-SPY ratio is at its lowest levels in over a decade. It’s a classic sign of a hated investment relative to the stock market.
In short, if you’re looking to shift money from overvalued assets to undervalued assets, gold and gold stocks are worth putting on your radar.
My goal is to help you become a better investor and make more money. This is the kind of chart analysis that can help find value in a world where stock values have been rising for years.
It’s something I’ll continue to do over the coming weeks.