S&P-To-Gold Ratio Flashes Generational Alarm

The U.S. equities are trading at fresh highs while numerous fundamental and technical indicators are flashing red.

Bankruptcy filings are up—446 large companies have collapsed so far in 2025, while market breadth has cratered to levels not seen since 2008. Valuations are superbly stretched as Robert Shiller's CAPE ratio is hovering near dot-com peaks, and Warren Buffett's market cap-to-GDP gauge signals a warning.

Timing The Bubble

Add it all together, and the ingredients of exuberant optimism are there. Still, Steve Hanke, professor of applied economics at Johns Hopkins University, warns about the illusion of timing bubbles.

"If you decide to go out – that’s one decision. But if you decide to go out, you’ll eventually have to decide when to get back in. It turns out, the record of people pulling out and then going back in is not good," he said in a recent interview with Adam Taggart.

The latest in the long line of indicators flashing red is the S&P 500-to-Gold ratio. For Danish economist Henrik Zeberg, an expert on long-term market cycles, the signal is one in a generation.

Lessons From The Past

Over the past century, this ratio has only indicated a technical reversal three times: in 1929, 1971, and 2000. Each moment marked the end of an era, whether it was the Great Depression, the collapse of the Bretton Woods system, or the dot-com crash. Now we're staring at the fourth instance in recorded history.

Technicals back it up. In a Substack post, Zeberg points out that the RSI and MACD indicators on the S&P/Gold ratio have just crossed lower—only the fourth time ever. When that crossover occurs, it signifies a shift in the cycle, with gold poised to outperform equities over the coming years. In 1929, the ratio imploded as stocks collapsed while gold miners surged.

S&P 500-Gold ratio, Source: TradingView

In 1971, Nixon ended the gold standard, sparking a decade-long boom in commodities. In 2000, the dot-com mania gave way to an eleven-year bull run in gold while stocks went sideways. Each of those reversals looked like noise at first—until they became the defining financial event of the decade.

The Dollar Squeeze

The macro data today rhymes uncomfortably with those inflection points. Breadth is vanishing, corporate defaults are accelerating, and even the tech leaders like Sam Altman admit we’re most likely in a bubble. Zeberg calls this cocktail the setup for a "deflationary bust"—stocks and real estate cracking under the weight of debt, while gold quietly takes the relative win.

And then there's the dollar. If Zeberg is right, a rising greenback is about to add gasoline to the fire. This opinion aligns with Brent Johnson's Dollar Milkshake Theory, which states that every time the global economy slows, the U.S. dollar tends to spike.

"Every time the global economy slows or every time we have a crisis, it coincides with a rising US dollar, not with a falling US dollar," Johnson said in a recent YouTube video. From the Russian debt crisis in the 1990s to the GFC and COVID, it has been the same pattern.

A stronger dollar squeezes everything—emerging markets, global trade, even commodities in the short term. That's why the S&P-to-Gold ratio matters so much here. It filters out the dollar's noise and shows who's really holding value when the storm hits.

If history is any guide, the ratio's breakdown suggests gold wins the next round—not because it explodes overnight, but because equities finally lose their grip.

Read Next:

• Central Banks Worldwide Hold More Gold Than US Treasuries For 1st Time In Nearly 30 Years: ‘Significant Global Rebalancings’ On Cards Says Analyst

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