"the gold-to-oil ratio is at its highest level in history at 37, where 20 represents periods of market crisis"
Gold has been one of Wall Street’s best bets early in 2016
By Mark DeCambre
Marketwatch.com
Published: Jan 27, 2016 1:34 p.m. ET
Who would have guessed that gold would be one of the best assets to own in 2016? So far, that has been the case—while the U.S. stock market has rung up its worst start to a year and a miasma of economic gloom continues to roll across much of the world.
Gold GCG6, -0.11% is on a hot streak, after shrugging off the Federal Reserve’s interest-rate increase back in December that should have spelled doom for prices. Instead, it’s on track to gain 5.4% so far in 2016, FactSet data show. True, it’s still early in the year, but if gold were to just tread water for the next 11 months, it would mark the best annual gain in four years.
By comparison, the S&P 500 SPX, +0.72% is down 6.4%, the Dow Jones Industrial Average DJIA, +0.83% has slumped 7% and the Nasdaq Composite COMP, +0.76% has skidded a hefty 9%.
Looking at other metals, gold is nudging ahead of its lower-priced sister, silver SIH6, -0.08% which is up 5% so far in 2016. Platinum is down 1% and palladium is seeing an ugly 11% decline. Let’s not even mention West Texas Intermediate crude oil CLH6, +2.68% The U.S. benchmark is tracking a 12% tumble.
And the outlook for gold might continue to be rosy even after the Federal Reserve releases a policy statement at 2 p.m. Eastern, according to Jeff Desjardins, founder and editor at Visual Capitalist.
Desjardins argues that gold miners GDX, +0.51% could slow production in 2016 and that tapering supply could boost gold prices. He also attempts to explain gold’s moves in the context of its stature as a haven investment compared with oil, which is viewed as a gauge of the health for the global market:
Desjardins highlights another interest metric, pointing to the ratio between the amount of oil barrels one ounce of gold can buy. The lower the number, presumably the healthier the state of the economy. Desjardins says the gold-to-oil ratio is at its highest level in history at 37, where 20 represents periods of market crisis, as this chart shows.
The folks at Visual Capitalist also offer this interesting fact about investments made in stocks versus gold during the 2008 financial crisis:
Investors that bought equities before the Financial Crisis have had a 20.2% return up until January 25, 2016. They “stayed the course” and were rewarded with an eventual return.
However, those that held gold during that same time period until today have had a 48.6% return, which is more than double that of the general market. This is even true with gold declining roughly 40% from its peak since late 2011.
That nugget is worth chewing on.
http://www.marketwatch.com/story/gold-bugs-have-been-crushing-it-in-2016-relative-to-stock-markets-2016-01-27
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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