GOLDEN
RATIO
AT A
GLANCE
This Golden Ratio Strategy has been built around the interplay the indices have with gold during bull and bear markets. As a default harbour against inflation, we have identified and quantified a statistical relationship between the two.
One constant trend we see repeated time and time again is the way people treat gold as a hedge during 'bad times'. That is, when the markets are under performing or are bearish, there appears to be a migration from the stock market into precious metals as a safe haven until we see a reversal. This strategy looks to take advantage of this using a proprietary ratio between the S&P500 and Gold to try to be on the right side of strongest trend.
BY THE
NUMBERS
EQUITY
GROWTH
Starting balance of $100,000 USD
HISTORICAL
PERFORMANCE
ASSET
ALLOCATION
INVESTMENT
STRATEGY
The Golden Ratio Strategy works by creating a unique ratio between the price of gold and the S&P 500 index. This ratio looks at multiple inputs including weighted averages over the short, medium and long term, growth of each respective market as well as a few custom indicators. Once this ratio is calculated, we then run a modified moving average across it to determine which of the two asset classes is the stronger play.
This is a slow moving strategy with maybe only three of four trades a decade, as it uses monthly data for its primary input and looks to exploit long term trends of the respective markets.
T
his is a long only strategy; however, we are exploring options to see if it is robust enough enough to work out if shorting an asset has more value than going long its alternative. As and when the strategy develops, all updates will be posted on the website as well as all printed literature.
