Gold Drops Nearly 30%
TL;DR
Benjamin Cowen argues that despite gold's 20-30% drop from highs, the metal remains in a larger bull market that could extend into the 2030s, particularly as the S&P 500 has fallen 44% against gold since 2022 and historical patterns suggest gold recovers faster than equities after recessions.
🏆 Gold vs. Stock Market Reality 3 insights
S&P 500 down 44% against gold since 2022
Despite the AI-driven equity boom and strong individual tech stocks, the index has significantly underperformed gold since ChatGPT's launch.
Current valuation far from dot-com extremes
The S&P/gold ratio sits at 1.51 compared to 5.5 at the 2000 peak, meaning stocks would need to rally 300% against gold to reach similar bubble territory.
Breakdown precedes recessions
When the S&P 500 breaks down against gold (as seen in 1973 and 2008), it typically marks the top for equities and precedes economic contractions.
📉 Historical Pullback Patterns 3 insights
Mid-bull corrections are historically normal
During the 1970s and 2000s bull markets, gold experienced drops of 30-48% and 34% respectively without ending the broader uptrend.
1974 analog suggests possible ATH recovery
After a similar ~27% drop in March 1974, gold still reached new all-time highs by December of the same year despite the recession.
Gold recovers faster than stocks post-recession
Following the 1973-74 breakdown, gold returned to all-time highs by 1978 (four years), while the S&P 500 didn't reach new highs until 1980.
⚠️ Recession Watch & Cycle Position 3 insights
Late business cycle environment confirmed
Current ITC business cycle indicators place us in a late-cycle phase similar to 1973 and 2008, explaining gold's recent outperformance.
Employment weakness emerging
Year-over-year non-farm payroll change has dropped to 0.0985%, approaching the negative territory that historically coincides with recessions.
Initial claims remain below recession threshold
Jobless claims remain at 200,000, below the 300,000 level Cowen uses to identify recessionary periods, though labor market excess has vanished.
₿ Bitcoin's Hypocrisy Exposed 3 insights
Bitcoin down 60-70% against gold since 2022
Bitcoin has significantly underperformed gold, topping against the metal in December 2024 at the same valuation level as the previous cycle peak.
Bitcoin returns to 2017 levels against gold
Bitcoin's valuation against gold has returned to 2017 levels, representing a lost decade of sideways performance relative to the metal.
Double standards in volatility criticism
Cowen criticizes Bitcoin holders for mocking gold's 20-30% correction when Bitcoin regularly experiences similar or larger drops within bull markets.
Bottom Line
Gold's current correction aligns with historical mid-bull market pullbacks during recessions, and investors should view it as a potential buying opportunity within a larger uptrend that could extend into the 2030s, rather than panic selling during temporary weakness.
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