Below is a 90 year chart of the S&P 500 divided by Gold ratio. The Series 65 (Registered Investment Advisor Exam) has almost no mention of Gold's proven diversification qualities for portfolios, even though Gold outperformed stocks during the decades of 1930s (deflation), 1970s.. 
..(inflation), & 2000s (2 financial crises). Most RIAs are sticking with the traditional 60-40 portfolio, hoping bonds will diversify equity risk, despite the fact that yields are at the lowest level in the history of the Republic. The exam asks if you expect inflation to occur..
..what should you recommend? The correct answer is stocks. The 60-40 portfolio lost 70% purchasing power in the 1970s. If you had expected inflation, that would have been horrible investment advice. A closer look at the ratio, shows Gold has begun major moves vs. stocks in the..
..past 2 financial crises. We are now in the 3rd recession since 2000; since March's lows stocks have outperformed Gold as the Feds purchases of financial assets have supported stocks. Over the past 2 weeks, the Fed has signaled rates will stay near 0, even if inflation rises...
...through the Feds 2% target. An even closer look at the S&P 500/Gold ratio suggests this short term rise is about done. Indeed, over the past 2 weeks, Gold has continually bounced off of it's lows, even with weakness in the S&P 500. It is our opinion, that Gold will prove to...
..be the better hedge to stocks, going forward as the Fed is allowing money supply to surge: the polar opposite monetary policy that Paul Volcker used to defeat inflation in the 1970s.
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