The Golden "Hook": Why Gold’s Refusal to Drop is a Major Signal

While the consensus waited for a rotation into risk, the RRG just flashed a rare "higher low." Here’s what it means for the S&P 500

In rules-based investing, the goal is to identify shifts in momentum before they are fully reflected in price. I am a big fan of Relative Rotation Graphs (RRG) and how they can help to visualize how different assets are performing compared to a benchmark like the S&P 500.

Current data suggests a notable shift in the precious metals space.

Specifically, SPDR Gold Shares (GLD) and miners like GDX and XME are exhibiting a technical pattern known as a “higher low” on the RRG.

While this is often viewed as a bullish signal by technical analysts, it is important to evaluate this rotation within the context of overall market risk and the limitations of momentum-based indicators.

What the RRG Tells Us (And What It Doesn’t)

An RRG plots assets across four quadrants based on Relative Strength (RS-Ratio) and Momentum (RS-Momentum). Assets typically rotate clockwise:

• Leading: Strong r…