Thursday, 27 June 2013

The S&P 500 / Gold Ratio Spikes hitting Highest Level since October 2008

Following a 7.9 % decline in the price of gold so far this week (as of 26 June) and the smaller 1.0 % drop in the S&P 500 index, the S&P 500 / Gold ratio has increased 7.5 % this week. At 1.297, the current ratio is the highest it's been since week ending 3 October 2008.

To the extent that stocks as an asset class is a risky investment and gold is viewed as a "safe haven" asset, the recent spike in the ratio may suggests investors are less risk-averse now than they have been for quite some time.

The current ratio is however substantially lower than it was prior to the "financial crisis" of 2008, indicating perhaps that investors are more risk-averse now than back then.

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