Are Stocks Catching Down To Gold?

Tyler Durden's picture


Year-to-date, the EuroStoxx 50 (Europe's Dow) is the best performing of the major asset classes of the developed world - besting the S&P 500 by over 300bps now. What is perhaps more interesting than this apparent dirty/clean shirt bet is that the S&P 500 was outperforming Gold by more than 850bps last week. It appears that since reaching that 2-sigma 'richness' that stocks and gold have begun to converge back to a more normal 'average' spread for the year. Gold remains +6.4% for the year versus 12% for the S&P (with recent historical vol considerably higher in stocks than gold) but the question is - is the long Gold, short Stocks pair due for a renaissance?


S&P 500 performance over Gold YTD - peaks and troughs around 2-sigma...


Stock vol rising relative to Gold vol...


Charts: Bloomberg

Your rating: None

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Thu, 12/27/2012 - 15:09 | 3099535 TruthInSunshine
TruthInSunshine's picture

Joe Weaselfail has established that one can't eat the gold ETF, but that both Zynga shares & Uncle Ben's Cotton Fiber are nutricious and delicious.

Thu, 12/27/2012 - 19:28 | 3100153 ball-and-chain
ball-and-chain's picture

I keep my money under the mattress.

I just don't trust the markets.  Nor do I trust metal.

I'm a fraidy cat.

I don't make bets unless I know I'm going to win.

I wish I had insider information.

Thu, 12/27/2012 - 20:17 | 3100279 asteroids
asteroids's picture

"Cash is a position." Nothing wrong with it. Waiting for the "right pitch" is smart.

Thu, 12/27/2012 - 15:10 | 3099541 buzzsaw99
buzzsaw99's picture

gold will catch down to oil eventually

Thu, 12/27/2012 - 15:23 | 3099582 Dre4dwolf
Dre4dwolf's picture

Only way that would happen is if we had a "Dollar Re-Valuation"/new currency atm..... or massive uncontrollable deflation (banks failing all over the place on the same day destroying all the digital FIAT).

Thu, 12/27/2012 - 17:51 | 3099949 GernB
GernB's picture

Because a massive and persistent reflation of a market trying to correct, but being prevented from doing so for years, would never lead to massive uncontrollable deflation.

Thu, 12/27/2012 - 19:47 | 3100198 malek
malek's picture

Because the forces of massive uncontrollable deflation would overwhelm even the greatest money printing efforts by the Fed? Dream on, LOL

Thu, 12/27/2012 - 16:35 | 3099756 bank guy in Brussels
bank guy in Brussels's picture

Latest from Jim Willie ... arbitrage on the gold price between the COMEX and Shangai, leading to the pressure of collapse for COMEX:

« The new wrinkle to render damage to the COMEX is the arrival of the Shanghai Gold Exchange. The graphic displays the differential, a basis for potential arbitrage. Complex arrangements can be constructed that take advantage of the differential, basically buying the gold metal in New York, finding a way to make it available in Shanghai, where it is sold at a $20 to $30 higher price. The end result of the arbitrage is high volume drainage of gold in New York. ... Finally COMEX based in New York, a major nucleus of corrupt financial markets, has some competition. Expect the spread to widen, the opportunity for arbitrage to grow, and pressure to build for a breakdown. »

Jim Willie - always a great read -

'The Coming Isolation of US Dollar'

Thu, 12/27/2012 - 15:10 | 3099547 rubearish10
rubearish10's picture


Thu, 12/27/2012 - 15:12 | 3099552 fourchan
fourchan's picture

Just wait until the ponz/fiat hits the fan.

holding the real never improvrished anyone unlike fiat.

Thu, 12/27/2012 - 15:18 | 3099565 Karlus
Karlus's picture

I think the big question is do you spend money on an expensive phyz hedge thru the cliff, or just let it ride and hope that there is not a big crash.

We are down 150 on the Dow and Gold did not melt off, so maybe a crash in Dow/S&P wont crush Au/Ag any worse than it is...hard to tell as everything has been backwards lately...

Thu, 12/27/2012 - 16:14 | 3099710 optimator
optimator's picture

One of these "Kicking the can down the road" they'll give a big kick to a Shue Mine.

Thu, 12/27/2012 - 17:53 | 3099954 GernB
GernB's picture

I'm fairly certain that kicking the can down the road to infinity, is currently priced into the market.

Thu, 12/27/2012 - 15:16 | 3099557 devo
devo's picture

It's not worth speculating since a rumor can turn everthing around in seconds.

Thu, 12/27/2012 - 15:19 | 3099569 debtor of last ...
debtor of last resort's picture

Yes, i heard a rumour there is a shortage of paper silver.

Thu, 12/27/2012 - 15:33 | 3099602 GMadScientist
GMadScientist's picture

A very large naked shortage.

Thu, 12/27/2012 - 16:11 | 3099702 debtor of last ...
debtor of last resort's picture

On the feds balance under 'other assets'.

Thu, 12/27/2012 - 16:12 | 3099704 optimator
optimator's picture

If they ever start printing the trillions they've wired around there won't be a tree in the country to cut for paper.  (I guess we may as well farm thatjpaper printing out to china too)

Thu, 12/27/2012 - 17:23 | 3099865 debtor of last ...
debtor of last resort's picture

The vultures go where the physical is going. Frontrunning the physical. As usual, after that, transform to fake/fiat, rinse RAPEat

Thu, 12/27/2012 - 15:48 | 3099634 optimator
optimator's picture

Seconds?  A lot quicker than that.

Thu, 12/27/2012 - 17:53 | 3099956 GernB
GernB's picture

I thought the rule was buy the specilation, sell the rumor.

Thu, 12/27/2012 - 15:17 | 3099559 tooriskytoinvest
tooriskytoinvest's picture

Gold And Silver Prices Will Explode In 2013: Global Monetary War Is Intensifying While Ben Bernanke Dumped Nearly $2 Trillion In Excess Deposits On Banks And Mr. Abe Calls For The Bank of Japan To Buy All Construction Bonds Issued By The Government


Thu, 12/27/2012 - 17:55 | 3099958 GernB
GernB's picture

Because people always behave exactly as the Fed plans. They would never shun gold in an era of infinite liquidity.

Thu, 12/27/2012 - 15:17 | 3099561 AgAu_man
AgAu_man's picture

Is gold Uncle Ben's "Converted (p)rice"?

Thu, 12/27/2012 - 15:19 | 3099566 Magnix
Magnix's picture

$1500 (or lower) a oz, Im buying bunch of MORE gold coins!

Thu, 12/27/2012 - 15:27 | 3099587 mayhem_korner
mayhem_korner's picture



Anticipating a dip to buy on is the corollary of shorting.  What will you do if it gets to 2500 without passing through 1500?

Thu, 12/27/2012 - 15:33 | 3099604 Magnix
Magnix's picture

Just crash it, man!

Thu, 12/27/2012 - 18:09 | 3099983 TWSceptic
TWSceptic's picture

Patience is a virtue, not many investors have it. You should always eliminate as much downside as possible. Gold and silver are still in consolidation, which means there is plenty of time to buy the dips through dollar cost averaging. Not many people expected December to be a bad month, but those who were cautious now have the cash to buy more.

Thu, 12/27/2012 - 17:56 | 3099963 GernB
GernB's picture

Isn't that the rule: buy the F*@$ing dips you F&$#ing moron.

Thu, 12/27/2012 - 15:22 | 3099579 Super Broccoli
Super Broccoli's picture

"stocks getting more volatile than gold"

Come on who needs a chart to understand that gold is a long position and stocks mend to be volatile in today's debt-crisis ZIRP-QEternity+ market ?

Thu, 12/27/2012 - 15:26 | 3099585 balz
balz's picture

Shit will catch to the fan.

Thu, 12/27/2012 - 15:46 | 3099628 optimator
optimator's picture

Nothing matters, at least for very, very short term.  "They" will have the market close green. 

Thu, 12/27/2012 - 15:54 | 3099637 optimator
optimator's picture

Yazzzzzzir, the PPT 2:40 just went by, right on time.  AmTrac should keep a  schedule like that!  I wonder if what's left of the Little People can take out real money faster than the Bankster can put in digital money?

Thu, 12/27/2012 - 15:27 | 3099586 youngman
youngman's picture

Todays little jump was "allowed" buy the Central Bankers or the Fed to put a little scare in the politicians to do something...they will take it away by the end of the year because they cannot have gold show up the dollar ...they need to keep the "faith"....

Thu, 12/27/2012 - 15:58 | 3099662 Ying-Yang
Ying-Yang's picture

In a word... no

Printing money is soooo easy a caveman can do it.


Thu, 12/27/2012 - 16:47 | 3099781 Bastiat009
Bastiat009's picture

No markets make any sense. Nothing is catching up to anything. Everything is political and manipulated. Nothing more, nothing else ...

Thu, 12/27/2012 - 17:04 | 3099824 falak pema
falak pema's picture

robespierre in high heels!

Golden thermidor.

Thu, 12/27/2012 - 17:40 | 3099923 Banjo
Banjo's picture

I guess the time frame must be one second ago? Since 2008 gold has been a decent investment. With the added bonus should the central planners fail and destroy faith in paper based money and multitude of debt based instruments you have an insurance policy that pays. (hopefully hehe)

My suggestion is get some gold but don't be ALL IN on anything very risky. 38% of my assets are 60/40 split silver/gold rest is property/cash 1.68% total debt looking to get this to around 12% probably property purchased at fixed rate. If they go hyper may as well pick up a freebie. NB possible risk in prop taxes and people not paying rents. *shrug* no one said it was going to be easy.

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