One of the key themes in the market is how money flows between various asset classes. If one analyses the performance of asset classes like Equities, Fixed Income, Gold, Currencies and Commodities it is clear that each has its own period of bullishness. Normally these are very large macro trends which last few years and maybe even decades.
If one is to analyse the long term chart of gold with the 50 month Moving Average (MA) it is clearly visible that it had a huge bullish phase between 2001 and 2010.
Let us see the ratio chart of Gold vs SP500. As is clear from the chart below when this ratio moves above the 50 month Moving Average (MA) it has been a good bullish phase for Gold. 2001-2010 was one such period. We now have a similar bullish move which gives a strong probability of the next few years being very good for gold.