Gold Is Taking the Shine Off the S&P 500

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The S&P 500 just experienced a 2% rally after a risk-off day, with the VIX nearly hitting 25 before reversing.
However, gold’s performance, with the SPDR Gold Trust (GLD) up 1.4%, outshone most S&P sectors, signaling underlying market unease. Gold’s outperformance suggests a shift away from inflationary assets, as demand for physical gold rises amid supply constraints.

The delisting of gold futures contracts on the Commodity Exchange (COMEX) and the London Bullion Market Association’s (LBMA) struggle to deliver physical gold highlights a growing distrust in financialized systems reliant on debt and monetary inflation.

This trend exposes the fragility of over-financialized markets, where unprofitable companies survive on cheap capital and inflated valuations, eroding real value.
Gold’s rise reflects a flight to assets that preserve purchasing power (as opposed to generating returns), which challenges the nominal gains of the S&P 500.

You see, when you adjust for inflation, the index shows no real returns over decades, revealing the illusion of wealth tied to money printing and debt accumulation. While gold recently surged past $3,000, its strength may signal dollar devaluation rather than inherent gains.

Amid all this, if the credit bubble collapses, risk assets like the S&P 500 could face sharper declines, even as gold and the dollar temporarily strengthen.

Here’s what I think we should do about it…

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