Does Gold Need To Decline For Equities To Stabilize & Rally?

Does a recovery in equities need to coincide with a decline in gold? Or, as the media often positions it, does "uncertainty" that's driving gold higher need to go away for the equity markets to stabilize and rally? No.

The strong correlation between stocks and gold exist not only during recession/depressions (period of great uncertainty) but also economic expansions (periods of perceived certainty).

The correlation between stocks and gold has been 0.74 since 1925. While this correlation has loosened during periods of uncertainty, it has nonetheless less remained generally positive. For example, the tables below illustrate the relative stability of their correlation over time despite extended periods of what today's media would characterize as fear and "uncertainty".

1925-Present


1929-1942



1968-1980


2000-Present