[Chart Of The Week] Gold To Outperform Equities?

Here's the Gold/Nifty 50 chart we've been using as our roadmap. Over the last six years this ratio has been building a long-term base, which it emerged from earlier this year as stocks sold off.

The ratio has fallen since, but is now approaching its initial breakout level near 3.55 as momentum diverges positively. Also note how far extended prices are from a still upward-sloping 200-day moving average. At the very least, this calls for some consolidation at current levels before prices begin their next major directional move.

Click on the chart to enlarge view.

In conclusion, it appears that conditions are set for Gold to outperform going forward, but only if this ratio can stay above 3.55.