So, gold didn't move below $1,500 and it rallied recently - the worst is behind us, right? It might be, but there are reasons to think otherwise and in today's essay we will feature two charts (courtesy by http://stockcharts.com) that should make you think twice before investing your whole capital in the gold market.

The first one features the Dow:Gold ratio.

The ratio appears to have broken above the declining resistance line. This is a bearish sign for gold relative to stocks, as it indicates that stocks will outperform the yellow metal. Please note that gold topped when this ratio bottomed and as the latter rallied, the former declined.

The ratio consolidated in the past few months (as gold did), but since the consolidation took place above the declining resistance line, it confirms the breakout and makes the situation more bullish for the ratio and more bearish for gold. Unfortunately (for those who "like" gold - we fall into this category), the next resistance level is quite far from where the ratio is today and this translates into a possibility of a significant decline in gold.

The second chart for today is the ratio of gold to prices of corporate bonds.

In short, this ratio tells you how gold performed relative to corporate bonds. This chart provides a clear bull market picture with several more or less significant corrections along the way. The "problem" here is that gold has broken two major support lines and has been trading below them for several weeks, which means that these breakdowns were verified.

This suggests that the decline is quite likely to continue and since this ratio moved very much in tune with the price of gold (no wonder - gold is in the numerator of the ratio), it serves as an indication that gold might decline as well.

Summing up, positive long-term fundamentals for gold are in place and we will most probably see much higher gold prices in a few years, however, the medium term is not that clear and we believe that caution is necessary.

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Thank you for reading. Have a great and profitable week!