Thursday, 05 July 2018 09:29

Gold’s Weakness is Great News for Stocks

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(New York)

Despite all the fears over a trade war, recession, and bear market, there has been relatively little media chatter surrounding gold. Gold is usually seen as a good hedge to political and market calamity, and while it has seen some gains, there isn’t the usual excitement that surrounds it. All of that may be good news, however, for stocks as the spread between gold and platinum suggests the equity bull market has more room to run, according to a pair of professors from Cornell and USC. The gold-platinum ratio reflects both industrial demand and investor anxiety, and when it is high, it tends to indicate that stocks will perform well.

FINSUM: There are a lot of factors that go into the price relationship between two commodities, so it is hard to draw a conclusion for a third asset class. That said, the logic underlying this argument seems sound.

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