When Equities Fall, Gold Outperforms — SPX/Gold Says It All

📊 Key insight

-Every major equity drawdown coincides with a drop in the SPX/Gold ratio — meaning gold outperforms stocks.

📉 What the chart shows

-1973–74 (stagflation): deep S&P 500 drawdown, SPX/Gold collapses.

-2000–02 (tech bust): ratio peaks ~5, then trends lower as gold rises and equities fall.

-2008–11 (GFC): brief liquidity hit to gold, then SPX/Gold plunges as gold rallies.

-2020 (COVID shock): rapid drop in SPX/Gold during equity sell-off.

-2022 bear market: ratio turns down again with inflation and rate stress.

Why it happens

-During market stress, investors seek safe collateral → gold demand spikes.

-Real rates and recession fears hurt equities more than gold.

-Silver carries industrial exposure, gold acts as a true safe haven.

🛡️ How to use it

-A gold allocation helps hedge against equity drawdowns.

-Long GOLD / short SPX (ratio trade) historically reduces portfolio volatility.

-Note: gold can dip during initial liquidity shocks (e.g., 2008, Mar 2020) — but recovers faster than equities.