2013 was a huge year for stocks. The S&P 500 surged 30%.
Meanwhile, gold had its first annual loss in a dozen years, tumbling 28%.
Citi’s Tobias Levkovich thinks the divide between these two asset classes can widen further.
“Despite the inverse performance of stocks and gold in the past year, equities look poised to continue outpacing the yellow metal in the years ahead,” wrote Levkovich in his January Chart of the Month note. “When the S&P 500 hit its tech bubble driven highs in 2000, its relative gains were more than one standard deviation above average trend and that is not the case now. Indeed, there still appears to be a fair amount of room for the recent relative price pattern to continue as the bounce off of more than one standard deviation below trend has only just begun.”
Levkovich charted the S&P 500 priced in gold. This ratio most recently bottomed in the fall of 2011, which sent a signal to BI’s Joe Weisenthal that the global economic crisis had ended.