Nasdaq 100 to Gold Ratio

My Note: Today's post is courtesy of Chart of the Day. The commentary and chart below simply illustrate the additional market distortions that the loose monetary policy continues to propagate. When the FRB expands the money supply it can influence the level of market interest rates in the short term, but it cannot readily control where the money is distributed in the economy. As noted by Chart of the Day, the highest ratio recorded was of 15.9 in March 2000 and the lowest was 0.28 in November 1987.  Although the ratio scale (Y axis) of the graph is a bit off, but visually examining it, a rough estimate as to when to purchase this index may be when the ratio hits about 1.5. At that point it might be wise to sell some gold and buy some Nasdaq 100.   

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The Nasdaq 100 continues to trade fairly close to all-time record highs.

So, how is the Nasdaq 100 performing relative to that other global currency — gold?

To answer that question, today’s chart illustrates the Nasdaq 100 to Gold Ratio.

Strong performance of the tech-laden Nasdaq 100 plus recent weakness in gold has the Nasdaq 100 (priced in gold) trading at 20-year highs — despite a historic pandemic.

It’s worth noting that the Nasdaq 100 to Gold Ratio is still well below its dot-com peak.