Short of a total collapse of Gold to levels in the last quarter of 2010 Gold will see gains of over 18% for the year. The S&P 500 current retraction is right at -1.80% making it the first decline since the bottom of the Great Recession in early 2009.
This is not to say Gold has enjoyed smooth sailing in 2011, as the final 2 quarters of this year have born out. Gold reached an all-time high in Dollars on Aug 23, 2011 of $1,920 then quickly pulled back to $1609.70 a 19% drop in a little more than a month. The high was just dollars short of our estimate of $1927 in June. (Gold Out Performs S&P 500) Since then Gold has been trading more like a equity stock than the safe-haven currency it traditionally has held.
Gold’s traditional position of 1.5 time the price of the S&P 500 it would place the price near $1,850. With the current spot at $1,658 Gold has the potential for another 11.5% run before the traditional January sell off. Gold should return to a safe haven status with in the next 3 months allowing investors to continue earnings that should out perform the S&P 500 for the near & mid term.