by Eldric Vero
May 29, 2025
This is a presentation of two United States of America (USA) publicly traded markets: the S&P 500 stock market index (SPGSPC) and the S&P commodity index (SPGSCI).
The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. Total market capitalization of the S&P 500 companies is in the order of 49.5 trillion $US as of April 30, 2025 as per Wikipedia (https://en.wikipedia.org/wiki/S%26P_500).
The S&P GSCI (formerly the Goldman Sachs Commodity Index) serves as a benchmark for investment in the commodity markets and as a measure of commodity performance over time. The index currently comprises 24 commodities from all commodity sectors – energy products, industrial metals, agricultural products, livestock products and precious metals. The S&P GSCI is a world-production weighted index that is based on the average quantity of production of each commodity in the index, over the last five years of available data. This allows the S&P GSCI to be a measure of investment performance as well as serve as an economic indicator (see https://en.wikipedia.org/wiki/S%26P_GSCI).
This is an update of the August 1, 2023 CotD https://eldric.substack.com/p/chart-of-the-day-cotd-usa-stocks?utm_source=publication-search
So similar to weather forecasts, the CotD author got it wrong in the August 1, 2023 forecast. Who would of thunk? Anyways, looking back, the GSPC to GSCI ratio high of 12.49 on April 27, 2020, was used as an anchor top for the next down-leg. However, it is now evident that the 12.49 ratio was part of a larger ratio top building process. The next two ratio tops of 11.46 and 11.19 occurred on December 6, 2024 and May 19, 2025, respectively, however, both failed to reach higher than 12.49. The CotD author has interpreted this as a “triple top” which is a bearish reversal chart pattern that indicates a potential shift from an uptrend trend to a downtrend trend. The bear market will manifest itself in the broad USA stock market indices, where as a bull market will be in the commodity sector, in the CotD author’s opinion. Also, look out your window to actually see if it is raining, just in case you need an umbrella!
Panel 1
This is a graph of the S&P 500 and the S&P GSCI indices since 1980. The S&P 500 rate of return is essentially quadruple of the GSCI over the past 45 years. Note the GSCI has effectively traded essentially flat since 2010 versus the S&P 500 which has increased by a factor of 5 times or about 11 percent per year. Amazing!
Panel 2
This graph presents a simple ratio of the S&P 500 index divided by the GSCI Commodity index. The ratio depicts the battle between the broad USA stock market index (in fiat dollars) versus real tangible value in commodities. Note the long-term cyclical nature and symmetry in this ratio with the slope of the “black lines” being near equal mirror images. The author has drawn a “purple dashed line” as a potential forecast in the future path of this ratio. The large red dot represents a ratio of 2.5 by 2030 which has multiple implications to the entire stock market complex. For example, should the S&P 500 waffle in a relatively constant manner (+/- 1000) at the 5,000 level for the next 4 to 6 years, then the GSCI (the red line above) would soar to about 2,000 (3.7 times from current value). These are fascinating times and the pathway ahead is still unclear. Remember, inflation is the key!
The Merovingian in The Matrix movie said it quite clearly “action…reaction, cause and effect”
