$10,000 in Gold (GLD)
In today’s “$10,000 in…” series, we’re taking a look at the gold ETF (GLD). The SPDR Gold Trust (GLD) began trading nearly 20 years ago in November 2004. It marked the first time that investors could easily allocate funds to gold in a brokerage account.
When GLD began trading on 11/18/2004, it had total assets of just under $600 million after its first day of trading. By the end of 2004, AUM had more than doubled up to more than $1.3 billion.
Today, GLD has more than $68 billion in AUM. At its last quarterly filing, it held more than 26 million ounces of physical gold valued at more than $62 billion.
So what would a hypothetical $10,000 investment in the GLD ETF on its release date in November 2004 be worth today? As shown below, $10,000 would now be worth roughly $52,000. That’s an annualized return of about 8.73%. Not bad for a piece of metal, right?
How does that $10k investment in GLD when it began trading nearly 20 years ago compare to something like the stock market? If we use the S&P 500 ETF (SPY) as a proxy for US large-cap stocks, a $10,000 investment in SPY on the same day that GLD began trading back in November 2004 with dividends re-invested would be worth about $68,725 today. That’s an annualized return of roughly 10.2%, or about 1.5 percentage points better than GLD annually. You can see how both GLD and SPY got to their current levels in the chart below.
As always, past performance is no guarantee of future results!
If you enjoyed this content, we think you’ll love Bespoke’s two membership levels. Below is a look at the various reports and tools included with a Bespoke Premium or Bespoke Institutional membership. Click here or on the image below to sign up for a two-week trial today!
Chart of the Day – A Pair Of Pandemic Performers
Bespoke’s MORTGAS Misery Index
Last year when mortgage rates and gas prices were rising steadily day in and day out to multi-decade highs, we created our MORTGAS Misery Index that is simply the sum of the 30-year fixed mortgage rate and the cost of a gallon of gas.
Below is an updated look at both gas prices and mortgage rates.
The national average 30-year fixed mortgage rate according to Bankrate.com is currently down to 6.86%, which is the lowest level seen since seen May 11th, 2023. As shown below, the peak for mortgage rates during the current cycle was 8.09% on October 25th, 2023.
Longer term, of course, mortgage rates remain very elevated. They would need to fall another 40 basis points down to 6.45% to get back to the peak readings seen in the mid-2000s prior to the Financial Crisis.
Gas prices have also been falling steadily since peaking in the spring (which is usually the case from a seasonal perspective). Using AAA’s national average for a gallon of regular unleaded, gas prices are currently at $3.387/gallon. That’s down about 30 cents from the peak price seen so far in 2024 of $3.679 on April 18th. Prices are down about 50 cents from their September 2023 peak of $3.88/gallon.
Longer-term, gas prices are currently about 50 cents above the 20-year average of $2.89/gallon. The low-point of the current decade came on April 28th, 2020 when the national average hit $1.768/gallon. The high point came on June 13th, 2022 when prices ticked just above $5/gallon ($5.016).
Combined, our MORTGAS Index currently sits at 10.2. As shown below, the index is down 1.46 points from its record high of 11.66 seen in late 2023, but it’s still extremely elevated relative to the last 20 years. Looking on the bright side, the index is now back below its peak seen in 2008 during the Financial Crisis, but we’re going to need to see significant further easing to get back to the 20-year average of 7.62. A drop like that would likely mean mortgage rates falling at least into the 4-5% range and gas prices remaining closer to a 2-handle than a 4-handle.
If you enjoyed this content, we think you’ll love Bespoke’s two membership levels. Below is a look at the various reports and tools included with a Bespoke Premium or Bespoke Institutional membership. Click here or on the image below to sign up for a two-week trial today!
Bespoke’s Morning Lineup – Divergent Sectors
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Common sense is very uncommon.” – Horace Greeley
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It was a positive tone heading into weekly jobless claims, and futures have remained higher following an inline report. Initial claims were in line with forecasts at 232K while continuing claims were slightly lower than expected (1.863 mln vs 1.870 mln). In Europe this morning, equities are also trading higher following a stronger-than-expected composite PMI report which was goosed mainly by the Paris Olympics.
Outside of Energy (XLE), large-cap sectors have performed admirably over the last five trading days. Of the eleven sector ETFs shown below, only Energy has declined and Real Estate (XLRE) is the only other sector failing to rally more than 1%. At the top of the list are Consumer Discretionary (XLY) and Technology (XLK) which have both rallied nearly 5% or more. Behind those two leaders, four other sectors have rallied more than 2% while three sectors have gained more than 1%. Ten out of eleven sectors are above their 50-day moving averages with six in overbought territory (1+ standard deviations above their 50-DMA) and another two sectors – Consumer Staples (XLP) and Health Care (XLV)– trading in extreme overbought territory (2+ standard deviations above 50-DMA).
From the highs in late March through now, the S&P 500 has experienced a V-formation where the magnitude and speed of the bounce was a mirror image of the decline, and the charts of both Consumer Discretionary (XLY) and Technology (XLK) illustrate that pattern.
While Consumer Discretionary (XLY) and Technology (XLK) have followed the pattern of the broader market, most other sectors have followed their own unique paths. Energy (XLE), for example, has missed out on most of the rally, remaining well off of its late July highs.
At the other end of the spectrum, if you look at the charts of the Consumer Staples (XLP) and Utilities (XLU) you would never even know that there was a decline in the first place. In the years coming out of the Financial Crisis right up until Covid, investors became used to sectors moving closer in unison to each other, but as the last several weeks have illustrated, it’s not always a tide that lifts and sinks all boats.
Continue reading today’s full Morning Lineup by starting a two-week trial to Bespoke Premium.
Daily Sector Snapshot — 8/21/24
Bespoke Baskets Update — August 2024
Chart of the Day: Jackson Hole Begins
Bespoke Best of Breed Basket Update — August 2024
Bespoke’s Morning Lineup – Target Hits the Bullseye
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“He who moulds public sentiment goes deeper than he who enacts statutes or pronounces decisions.” – Abraham Lincoln
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Between the 10%+ rally in shares of TGT and last week’s 6%+ rally in Walmart (WMT) in reaction to its earnings report, it’s hard to get too concerned about the health of the US consumer. Yes, these are more anecdotal observations than quantitative, but they’re also two of the largest retailers in the country,
Let’s start with TGT. The chart below shows TGT’s historical performance on its earnings reaction days since 2002. With the stock trading up over 10% in the pre-market, today would be the third time in the last four quarters that the stock had a double-digit positive reaction to earnings. Since 2002, there have only been seven times when the stock had an earnings day reaction of more than 10%.
Regarding TGT’s stock performance, it had been ‘on sale’ for months heading into this morning’s report, but based on where the stock surged to in the pre-market, the downtrend from the spring high has been broken.
Looking back to WMT’s report last week, the stock’s 6%+ rally was the first time in at least 20 years that it experienced back-to-back earnings reaction day rallies of over 5%, and those two one-day rallies were the fourth and fifth best earnings reaction day performances since at least 2002.
Unlike TGT, which had been under pressure heading into today’s report, WMT’s chart has been more of a one-way move to new all-time highs. WMT’s strength could be construed as a sign that consumers are trading down due to a tough economic environment, but the company made no such comments in its conference call last week. CEO Doug McMillon flat-out rejected that idea when he said “So far, we aren’t experiencing a weaker consumer overall.” CFO John David Rainey reiterated that point when he said, “Each of the months of the second quarter were relatively consistent… Even in the first couple weeks of August here, things have been remarkably consistent.”
Turning to retail stocks in general, it’s been a rangebound summer for the sector. The chart below shows the performance of the SPDR S&P Retail ETF (XRT) which tracks the performance of retailers on an equal-weighted basis. After a strong rally of over 30% off last fall’s lows, the ETT stalled out just under $80 before the broader market corrected in the spring. Since then, XRT has made four additional attempts at breaking through the $80 level but has been stymied each time. TGT’s rally this morning will provide a boost to the sector, but it’s going to take more than that to get it over the hump.
On a longer-term basis, that $80 level in XRT represents an important level, and if and when it can finally break through that resistance, a run to the post-COVID stimulus-fueled highs would be the next level to watch for.
Continue reading today’s full Morning Lineup by starting a two-week trial to Bespoke Premium.