Financial advisor expresses concern over gold surpassing stocks and cryptocurrencies

Mike McGlone, senior commodity strategist at Bloomberg Intelligence, has issued a cautionary note about the current performance of stocks, cryptocurrencies, and gold. In a post on August 23, McGlone highlighted some concerning trends that could signal potential trouble for risk assets.

The S&P 500, measured in ounces of gold, has been on a downward trend and is tracking closely with U.S. 2-year Treasury yields. This rollover is significant, as it reverses a long-term trend where the S&P 500 had been gaining ground against gold. The ratio of the S&P 500 to gold now sits near multi-decade lows, underscoring gold's steady outperformance.

Bitcoin, often referred to as "digital gold," has also stalled against gold. Cryptocurrencies continue to display frothy, bubble-like behavior, leaving Bitcoin's leadership role vulnerable if confidence weakens further. McGlone emphasized that this persistent outperformance of gold over other assets is a warning sign for risk assets.

McGlone previously argued that a rebound in volatility could push the VIX back to its 2025 average near 20. However, despite the VIX being at fresh lows, Bitcoin has struggled to sustain momentum. The concern extended to Bitcoin's ability to gravitate toward its $100,000 mean, as suggested by McGlone's previous arguments.

Gold, on the other hand, has outperformed both equities and cryptocurrencies for nearly eight years. This divergence between gold and other assets, according to McGlone, reflects fading confidence in human ingenuity and corporate earnings. Historically, such declines have coincided with periods of stress for risk assets.

Central banks, especially major buyers like Russia and China, could play a significant future role in influencing gold prices through their large-scale purchases or sales of gold reserves. McGlone warned that in either case of Federal Reserve rate cuts or continued rising long-term Treasury yields, gold stands to be one of the biggest beneficiaries.

Despite all three asset classes enjoying positive momentum in 2025, gold has remained steady while cryptocurrencies and stocks have faced volatility. This steady performance of gold, combined with the underperformance of stocks and cryptocurrencies, suggests that investors may be losing confidence in the traditional market.

In summary, McGlone's comments highlight a concerning trend where gold is outperforming other assets, potentially signaling a loss of confidence in the traditional market. This trend, combined with the frothy behavior of cryptocurrencies, could make these assets vulnerable if confidence weakens further.