Catalyst for Gold Locked and Loaded?

By Trey Reik, Senior Portfolio Manager, Sprott Asset Management USA, Inc.

Gold Outshines the S&P 500 in 2018

We believe that gold bullion and gold mining equities may be poised for a multi-year uptrend. Gold bullion beat U.S. equities for the month of December, the fourth quarter, and the full calendar year of 2018. Spot gold1 declined 1.58% versus the 4.39% drop in the S&P 500 Total Return Index2 in 2018 (Figure 1). Gold also outperformed most currencies last year, with the exception of the Swiss franc and the Japanese yen.

The bulk of gold’s 2018 outperformance came in the fourth quarter, on the back of the steep fall of the S&P 500 after it hit a high in late September, as shown in Figure 2. Gold rallied 7.54% in the fourth quarter, while the S&P 500 lost 13.52%. The rise in gold mining equities was also impressive in Q4, with Sprott Gold Miners ETF (SGDM)3 gaining 12.63%.

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1 Spot gold is measured by the XAU: The ISO 4217 standard code for one troy ounce of gold, considered as a currency.
2 S&P 500® Total Return Index represents 505 stocks issued by 500 large companies with market capitalizations of at least $6.1 billion, and reflects reinvestment of dividends. This Index is viewed as a leading indicator of U.S. equities and a reflection of the performance of the large-cap universe. The TR Index represents dividends reinvested.
3 Sprott Gold Miners ETF (NYSE: SGDM) seeks to deliver exposure to the Sprott Zacks Gold Miners Index (NYSE: ZAXSGDM). The Index aims to track the performance of large to mid-capitalization gold companies whose stocks are listed on major U.S. exchanges