The Bulls and Bears of the S&P 500: Just Another Chart Showing How Cheap Gold Stocks Are

Cejay Kim September 3, 2015
Category: Research

Since the 1950s, the S&P 500 has experienced ten bull markets and nine bear markets. The average length of a bull market has been 282 weeks, with the bear markets averaging 67 weeks.

The most prolific bull market occurred during December 4, 1987 to March 24, 2000, when the S&P returned 549% over 642 weeks. To put that into perspective, the current bull market is at 339 weeks and at a 161% gain.

Now let’s take a look at how gold companies performed during these bull markets.

When comparing the S&P 500 to the Barron’s Gold Mining Index (BGMI), the ratio reached a high of 6.32 during the 1987-2000 bull market. The ratio today is 6.39. The higher the ratio, the cheaper gold companies are.

This means that when comparing gold companies to the S&P 500, we are seeing the cheapest gold stocks ever!

Will gold companies become cheaper? No one knows, but buying at unprecedented lows is not a bad idea.

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