AAAU - The Misery Index Points To Gold Gains And U.S. Equity Declines

• The misery index is the sum of the inflation rate and the unemployment rate, and has historically been highly correlated with the ratio of the S&P 500 over gold prices.
• Despite rising inflation and an elevated unemployment rate, the S&P 500 is trading at multi-year highs relative to gold.
• Previous such episodes have resulted in large declines over subsequent years, and I expect history to repeat.
• It would likely take a surge in inflation to become clear to a critical mass of voters that reduced government involvement in the economy is needed to foster sustainable economic growth and social stability. In the meantime, I expect to see gold dramatically outperform U.S. stocks.

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