The holiday-shortened week marked a significant change in asset performance with gold outperforming technology on a year-to-date basis. This impacts diversified portfolios.
As of the close of last Thursday, YTD return for GLD is at 11.85% versus 10.29% for QQQ total return. This week QQQ lost 1.2% while GLD rose 2.6% taking the lead from the technology ETF.
As it may be seen from the above chart, the reversal in the QQQ/GLD spread with a current value of -156 basis points is significant considering that only a month ago it was at +670 basis points.
This significant reversal impact returns of diversified portfolios. If this trend continues, portfolios that have not invested in gold and are over-weighted in technology will underperform. This may cause a stampede in the next few week and we may see higher gold prices with portfolio managers adjusting allocations.
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