Pro Perspectives 10/21/24
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October 21, 2024
With gold continuing to print new record highs, let's take a look at historical extremes in the ratio of gold prices to two key asset prices.
Here's a look at gold prices relative to crude oil (WTI) …
As you can see to the far right in the chart, we are at an historic extreme, where the price of gold is 39 times the price of a barrel of WTI crude oil.
If we look back over 75 years of data, these extremes in the ratio were resolved (i.e. turning point in the ratio) in each case by a sharp rise in the price of crude oil.
Next is the S&P 500 to gold …
The S&P is currently 2.2 times the price of gold. Notice that the extreme of the late 90s tech bubble, which was ultimately resolved with a crash in stock prices, began at a much higher multiple of gold prices.
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