A rising line indicates it is outperforming the metal. A falling line indicates that Gold is outperforming the Dow.
The first chart is a weekly chart of the ratio going back to 1979. The latter is a Daily providing a closer look at the last few years. Notice how gold was outperforming the Dow during the credit crisis eruption in the middle of 2008 but since the FEd began its Quantitative Easing policies, they have managed to keep the liquidity pumping into the stock market in order to levitate it. Even at that, the ratio has been pretty much flat although so far this year, Gold is slightly outperforming the Dow as a whole.
I wish there was a gold denominated equivalent to the SPY...
ReplyDeleteWow, look at that massive head and shoulders on the Dow-Gold ratio chart. Thanks Dan
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