- WeekendInvesting
- Posts
- PM Modi’s SHOCKING Gold Warning
Market Update - Tuesday, 12 May
Prime Minister Modi has recently requested that citizens refrain from purchasing gold for one year. This is not the first time a leader has made such an appeal; history shows several instances where the government has tried to curb gold consumption. Over the last 50 years, leaders like Indira Gandhi and former Finance Minister P. Chidambaram in 2012-13 have made similar requests. Despite these efforts over the decades,….
Turning to the financial markets, the mood on May 12th was notably somber. Investors are encouraged to read the disclaimer before proceeding with the data. The Nifty was hit hard, dropping 1.83% and breaking a support gap that had held since the beginning of April.
The broader market saw even steeper declines. Small caps fell by 3%, while the Nifty Next 50 and mid-cap indices dropped nearly 2.5%.
The Nifty Bank lost 1.6%, and while gold remained relatively flat at -0.41%, crude oil spiked by 2.52%.
Other Market Triggers
The Nifty heat map was almost entirely red, with only Hindalco and ONGC showing gains.
IT stocks were hammered significantly, and major banks like ICICI and HDFC were down.
Consumer goods and retail also suffered, with Titan falling another 3.5% as jewelry-related companies felt the pressure.
U.S. Market Updates
In contrast to the domestic market, the U.S. markets showed resilience in their previous session.
Qualcomm rose 8%, while companies like Tesla, Intel, and Exxon gained between 3% and 6%. The S&P 500, Dow Jones, and Nasdaq all saw modest gains, continuing a bull run driven by semiconductor and AI stocks.
The Nasdaq 100 heat map highlighted strong performances from Intel, Cisco, and Qualcomm, though Amazon, Google, and Walmart faced some selling pressure.
What to watch next ?
The technical break in Nifty suggests a period of consolidation may be required before any upward movement resumes. The last four sessions have effectively erased recent gains.
This downturn isn't solely due to domestic speeches; it is precipitated by an escalating war, rising crude oil prices, and a lack of progress in ceasefire talks.
Forwarded this email? Subscribe Now
Top Trending Strategies
Mi EverGreenPower of Gold with Equity | Allocate 20 strongest CNX200 stocks with Gold ETF | Monthly Rebalanced Mi Evergreen is a dynamic strategy which aims to outperform the underlying benchmark CNX200. This index comprises 200 large and mid-cap names which are the top-quality stocks in the markets. This product is suitable for use in all stages of the market cycles as it is designed to invest in the strongest stocks in the pack at any point. Additionally, there is a permanent hedge of Gold available here.
| Mi AllCap GOLDA core strategy to allocate 25% each to Large Cap , Mid Caps, Small Caps & Gold Mi AllCap GOLD is a robust, rule-based core rotational strategy from the House of WeekendInvesting, curated to cover stocks in the CNX500 universe, designed to offer a balanced asset allocation and diversified wealth creation approach for compounding returns over long periods of time.
|
📈 Real Growth vs. The Illusion of Gains: A Lesson from Luke Gromen
Today, we’re diving into data presented by Luke Gromen, a highly respected macro analyst. His recent charts provide a sobering perspective on the current bull market and why your portfolio might not be as "ahead" as you think.
The Golden Yardstick: S&P 500 vs. Gold
When we look at the stock market, we usually look at nominal returns (the price in Dollars). However, Gromen argues that to see the "real" value, we must normalize the S&P 500 against Gold. Gold acts as a constant; it doesn't suffer from currency debasement. When the S&P 500 outperforms Gold, the economy is truly growing. When it lags or stays flat against Gold, we are simply seeing inflation or currency devaluation at work.
1982–1999: The Era of True Performance
Looking back at the period between 1982 and 1999, the data tells a story of massive outperformance.
Source : Luke Gromen on X
The Blue Line (S&P 500): Skyrocketed.
The Red Line (S&P in Gold): Also rose sharply. During this era, Gold remained stagnant while stocks soared. This meant that the S&P 500 was generating real wealth far beyond the depreciation of the Dollar. If you held stocks, you were getting richer in both paper money and actual purchasing power.
2009–2026: The Great Illusion
Now, let's look at the current cycle (2009 to 2026). On the surface, the S&P 500 (Blue Line) looks incredible—it’s a steep climb to all-time highs. However, look at the S&P Price in Gold (Red Line):
In real terms, the S&P 500 has essentially stayed flat.
While your account balance in Dollars is higher, your ability to buy Gold with those profits hasn't significantly increased compared to 15 years ago.
The Takeaway: Without factoring in dividends, the "Real" stock market hasn't gone anywhere. We are running up a down escalator.
Why Diversification is No Longer Optional
Gromen’s message is clear: comparing the current rally to the 1990s is a mistake. We are in a different regime where stocks are struggling to outpace the devaluation of the currency.
"On an absolute basis, it looks like stocks are performing great. But in reference to Gold, they are barely holding their ground."
This is why having a significant allocation to Gold is essential. It protects your purchasing power when the "growth" in the stock market is just a reflection of a weaker currency.
Meme Of The Day
Share this daily insightful newsletter with your market savvy friends and family or sign them up for the newsletter !
For detailed blogs, reports and strategies, check WeekendInvesting.com
Reply