Big Picture Charts

Posted by Steve Saville - The Speculative Investor

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Just for a change and on the off chance that we will be able to obtain some useful information by doing so, we’ll now take a look at some long-term monthly charts. The blue line on each of these charts is the 12-month moving average.

The first two long-term charts show the S&P500 Index and the US$ gold price. We have put the gold chart immediately below the S&P500 chart to illustrate that secular trends in the gold and equity markets are linked. For example, gold’s current secular bull market is linked to the S&P500’s current secular bear market. To put it another way, gold is currently in a secular bull market BECAUSE equities are in a secular bear market. The implication is that gold will remain in a secular bull market until the S&P500 becomes under-valued based on traditional valuation metrics.