Gold depreciation

Whilst reading the Guardian today, I came across an interesting article which states that Gold is set to decrease in price, as demand from institutional investors switches to other assets such as stocks, which are now thought to offer better risk-adjusted returns. This is significant for a number of reasons : Firstly, this means that stocks are deemed to offer better risk-adjusted returns, which are broadly calculated by the asset’s beta rating. Furthermore, Gold is seen largely to be a safer alternative to stocks and derivatives. This is demonstrated by the following graphs showing Gold prices and the FTSE 100 index:

 Note the inverse relationship between Gold price changes and the FTSE index in the midst of the financial crisis and subsequent recession. As such, one can interpret the Gold depreciation as being ultimately a good indicator of economic recovery, or at the very least, increasing confidence.