U.S. Budget Deficit Correlation to Gold/S&P 500 Ratio

Three weeks ago, we told you about how the trailing twelve month U.S. Budget Deficit as a % of U.S. GDP has been deteriorating since July 2022 when it hit a 56-month best of -3.76%. We explained how the U.S. Budget Deficit was -7.3% of GDP at the end of April, which was worse than 91.8% of the last 63 years.

As of the end of May, the trailing twelve month U.S. Budget Deficit as a % of U.S. GDP has deteriorated further to -7.91%.

Historically, there has always been a strong correlation between the U.S. Budget Deficit as a % of U.S. GDP and the Gold/S&P 500 Ratio. When the U.S. has a Budget Deficit of -4% or worse the long-term median Gold/S&P 500 Ratio is 1.044. When the U.S. has a Budget Surplus of 2% or better the long-term median Gold/S&P 500 Ratio is 0.1993.

Currently, the Gold/S&P 500 Ratio is 0.44, and with a Budget Deficit of -7.91%, gold has never been more undervalued with more upside relative to the S&P 500.

The Gold/S&P 500 Ratio always bottoms when the U.S. Treasury 10-1 year yield spread inverts to -0.45%. The further the U.S. Treasury 10-1 year yield spread inverts, the larger the rally in the Gold/S&P 500 Ratio will be as soon as the U.S. Treasury 10-1 year yield spread begins to normalize upward.

From the current U.S. Treasury 10-1 year yield spread of -1.495% it will be one of the largest upward explosions in gold and one of the largest S&P 500 crashes of all-time.

This is why NIA's President will soon profit 1,000%+ on Augusta Gold (TSX: G) and North Peak Resources (TSXV: NPR).

We are just telling you what is going to happen.

Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. NIA's President has purchased 224,200 shares of G in the open market and intends to buy more shares. NIA's President has purchased 60,000 shares of NPR in the open market and intends to buy more shares. This message is meant for informational and educational purposes only and does not provide investment advice.