|GLD/SPY (see below)|
The first chart (as seen above) shows more than two years of sideways action after the ratio put in a blow off top at 1.41 in early 2009. I'm wondering if GLD outperforms SPY going forward, even if they both go down in tandem. It depends if the ratio can take out 2010 resistance in the sideways channel and stay on the uptrend line from 2007. If GLD underperforms SPY in the near term and breaks down, there is still a major uptrend line to test when using the 2000 and 2007 lows. If GLD/SPY gets above 1.20, it could be ready to test the 1.41 high (imo).
When looking at the last two recessions, GLD outperformed SPY during the 2000-2003 and 2007-2009 periods. Not only are the Euro and US Dollar looking ugly at the moment due to fiscal crises, some economists and analysts are predicting a new recession in 2012. Treasury yields and Eurozone solvency are probably the wild cards for gold and currencies in my opinion. What do you think. GLD by itself is in a strong ascending channel using the uptrend from 2008. GLD looks strong at the moment, but it also looked strong in the second half of 2007 before it peaked at 100 and lost 30% in 2008. When that happened, the GLD/SPY ratio chopped around between 0.64 and 0.85. See charts below of GLD/SPY, GLD:SPY performance and GLD.
GLD/SPY 12 Year Uptrend Starts In 2000 (Courtesy of StockCharts.com)
GLD:SPY -16.42% From the March 2009 Bottom on the S&P (Courtesy StockCharts.com)
GLD 12 Year Uptrend (Courtesy of StockCharts.com)