Market Blog
September 11, 2019
On this 18th anniversary of 9/11, our thoughts go out to everyone impacted on that fateful day.
“The higher the base, the higher in space,” is an old technical analysis saying.
Gold is up 18% year-to-date (as of 9/10/2019), poised for its best year since 2010, when it gained 30%. We see many reasons why this rally may have legs.
Last year’s action was rare: The S&P 500 Index, 10-year U.S. Treasuries, and gold were all lower. Going back to 1971, when gold was officially removed from the gold standard, last year was the first year that all three assets were lower in a calendar year. Now in 2019, all three assets are up significantly, quite a difference from last year!
Gold and stocks have trended the same way: Since 1980, stocks and gold both have risen in 19 of those 39 years, and both have fallen in only four years. Somewhat surprisingly, both were up more than 10% in eight of those years. Gold might be viewed as “defensive,” but history shows there can be times when both gold and stocks have had nice gains together.
“Gold is breaking out to new highs after doing nothing for years,” explained LPL Financial Senior Market Strategist Ryan Detrick. “Concerns over the global slowdown, $17 trillion in negative yielding debt, inverted yield curves, and central banks stepping up their gold purchases have all pushed the yellow metal out of a picture-perfect base.”
Technicals support a rally: As shown in the LPL Chart of the Day, gold completed a nice-looking six-year saucer bottom and broke out above previous resistance. As the quote at the start of the blog noted, when things base for years, the potential move can be quite explosive.
A well-deserved pullback may present an opportunity for suitable investors to add exposure in appropriate strategies.
IMPORTANT DISCLOSURES
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
The gold market is subject to speculation and volatility as are other markets. Commodity-linked investments may be more volatile and less liquid that the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, geopolitical events, and regulatory developments. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
This Research material was prepared by LPL Financial, LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use | Tracking # 1-892111