Did the San Francisco 49ers Strike Gold? SPDR Gold Trust (GLD), Barrick Gold Corporation (ABX)

Page 1 of 2

The gold rush of 1849 — whence the “49er” moniker derives — may be long over, but might the San Francisco 49ers’ loss during Super Bowl XLVII signal the beginning of the next move higher for the gold market?

According to a fanciful stock market prognostication tool known as the Super Bowl indicator, if the NFC wins, the market should be up for the remainder of the year, while an AFC victory signals a market decline. One of the biggest enemies of gold’s attempts to go higher over the last few months has been the strength in the stock market. By losing Sunday’s close-fought battle, the 49ers may have struck again.

Barrick Gold Corporation (USA) (NYSE:ABX)The indicator
Just to be clear, I am being tongue-in-cheek by suggesting that this is an indicator on which to base real trading decisions, but as it does have some psychological influence on how traders will at least start the week, it’s worth a brief look. The Super Bowl indicator, which was accurate 28 out of 31 years between 1967 and 1997, has an overall accuracy rate of about 75%. Adding to the fun is that it poses an interesting dilemma for this year’s winner.

But it gets confusing when you consider that the Baltimore Ravens’ history can be traced to the first Cleveland Browns franchise, which was in the original NFL before the AFL-NFL merger. Most teams in the old NFL became NFC teams after the merger — but not the Browns, which entered the consolidated NFL as an AFC team. If you wanted to take a purist position, you might argue that the team should be counted as an NFC team. However, as the San Francisco 49ers proudly represented the NFC, the honors this year must go to the AFC. As such, the uptrend in stocks should reverse if the indicator holds.

Good news for gold
Looking at a chart of gold, as represented by the SPDR Gold Trust (ETF) (NYSEMKT:GLD) , relative to the S&P 500, as represented by the SPDR S&P 500 , there has been strong negative correlation between the two markets. As stocks have ticked higher, gold has taken a break from its extended uptrend. A correction or reversal in the direction of the stock market should be seen as a major positive for precious metals such as gold.

GLD Chart

GLD data by YCharts.

Other positive news for the gold market is the general weakness that exists in the economy. Last week saw a negative print for the U.S. gross domestic product (GDP) and an uptick in the unemployment rate. While the market ignored the news, surging higher to close above 14,000 on the Dow for the first time since October 2007, it’s unlikely that the Federal Reserve missed the report. Remember that the Fed has vowed to keep the money-printing machine, also known as bond buying and quantitative easing, running full tilt until the unemployment rate falls below 6.5%. At this rate, I expect that the printing will continue until heavy inflation kicks in and sends gold higher.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!