This week I stumbled upon an interesting chart. In this chart, the Goldman Sachs Commodity Index (GSCI), an index tracking the prices of a basket of commodities, is contrasted with the S&P 500 index. This gives us the GSCI/S&P 500 ratio. Whenever the GSCI/S&P 500 ratio is high, we are paying relatively little for stocks in terms of commodities. Conversely, if the ratio is low, we are paying relatively much for stocks relative to commodities. What does the ratio imply right now? Is this the moment to invest in precious metals?

The Commodity/Stock Market Ratio in Historical Context

Source: Incrementum AG

Ifs and Buts

The weights of the underlying commodity categories in the GSCI commodity index. Source: S&P Dow Jones Indices

The gold/oil ratio. Source: Macrotrends.net

s&p 500/Gold-Ratio. How much gold is needed to buy an index? Source:macrotrends.net

The gold/silver ratio. Source: Goldprice.org

And What About Platinum?


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