From that low gold/S&P 500 ration in 2008, GLD posted a gain of nearly 5% that year and would rise in each of the following four years before gold was punished in 2013.
While volatility is currently low and a case can be made that gold is undervalued, as ETF Securities points out, bullion is facing another hurdle: A strengthening U.S. dollar and possibility of a weaker euro.
The PowerShares DB US Dollar Index Bullish Fund (NYSEArca: UUP) rose 1% last month while the CurrencyShares Euro Currency Trust (NYSEArca: FXE) lost 1.8%. The European Central Bank meets Thursday and it is widely expected the ECB will announce some form of easing or stimulus measures that further weaken the euro in the near-term., which could put added pressure on gold. [Dollar ETFs Ready to Soar]
SPDR Gold Shares
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD.