S%26P 500 and gold The relationship between stock valuations and the price of gold is widely debated. I chose a nearly 20-year comparison between a gold-silver index versus the S%26P 500 and the much lower performing gold-silver index. Global GO GOLD and Precious Metal Miners Index uses a robust, dynamic, rules-based smart factor model to select precious mineral companies that earn more than 50% of their aggregate revenues from precious minerals through active (mining or production) or liabilities (royalties or flows) media. This can cause gold and its related stocks to move in the same direction as the dollar rather than in the opposite direction.
And, in the past, the correlation has increased only to fall back into negative territory, as both graphs show. That said, data shows that gold has tended to continue to rise when it starts trading in record territory, while stock price rallies eventually fade. Funds made of gold, precious metals and precious minerals can be susceptible to adverse economic, political or regulatory developments because they are concentrated on a single topic. I watched a video on YouTube in the middle of this year and made a note on my blog to remind me that I should revisit gold at some point.
Gold GC00, +0.29%, has traditionally rallied as stocks have fallen due to the yellow metal's status as a safe move in times of uncertainty. I would like to build a position first in GLD gradually as the market balances due to positive trade developments as I continue my research into gold mining stocks. Hamilton ends the article with a warning of a gold correction, which would represent a buying opportunity. The so-called printing of money has been one of the factors that gold bulls point out when they defend new runs for the metal.
Contributor SomaBull is in the bullish field, and says that gold is not even close to its peak in his latest article. Adam Hamilton is in the bearish field claiming that the recent demand for investment in gold is fragile, reflecting a bearish short-term outlook. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index composed of publicly traded companies that are primarily involved in gold and silver mining. While the S%26P 500 ETF (SPY) fell by 20%, the Gold Miners ETF (GDX) fell by 6%, while the Gold Equity ETF (GLD) increased by 27% in price, representing an annual return of 14%.
A correlation of 1 would mean that stocks and gold move in unison, while a correlation of zero indicates that there is no relationship; and a correlation of 1 negative indicates that assets are moving in the exact opposite or reverse direction.