Gold and Tech: A Curious Non-Relationship

Highlights

• Contrary to common wisdom, gold and the Nasdaq have near-zero correlation over long periods.
• The belief in negative correlation stems from their labels — gold as “risk-off,” tech as “risk-on.”
• In reality, both respond to liquidity and real-rate cycles, not to each other.
• Crises produce negative correlation; liquidity booms turn it positive.
• A persistent “wall of money” now supports asset prices across the risk spectrum.

____________________________________________________________________________________________________

Data to Keep in Mind

Our central thesis is that the post-Covid liquidity glut has created a wall of money supporting nearly every asset class — from safety-first gold and Treasuries to the Nasdaq (as a proxy for tech), high-yield corporates, emerging-market debt, and even crypto.

Here are the key figures underlying that view:

• U.S. Money-Market Assets: ≈ $7.0 trillion (as of Oct 2025, ICI & Federal Reserve)
• Post-Covid Fiscal Stimulus: ≈ $5.3 trillion (CARES Act, American Rescue Plan, PPP, etc.)
• Stimulus Size: ≈ 25 % of U.S. GDP (2020 – 2022)
• Excess Household Savings: Peaked near $2.5 trillion in 2022, still above pre-pandemic trend

These liquidity buffers — much of it still earning up to 5 % yields in short-term instruments — continue to underpin demand for all assets.

The Risk-On / Risk-Off Myth

It’s intuitive to think of gold and tech as opposites. Gold is the archetypal risk-off asset: it pays no yield but offers psychological safety. The Nasdaq, by contrast, represents risk-on: long-duration, innovation-heavy, and sentiment-driven.

So the logic goes — when fear rises, gold rallies; when confidence returns, tech soars.

But the data say otherwise. From 2010 to 2025, the average correlation between gold and the Nasdaq has hovered near zero. Sometimes positive, sometimes negative — but usually insignificant. Their supposed opposition dissolves under statistical scrutiny.

When Fear Rules Correlation Turns Negative…

During true tail events — the Global Financial Crisis or the 2020 pandemic crash — investors behave predictably: they dump equities, hoard cash, and seek refuge in gold. Correlation plunges below −0.5, the textbook “risk-off” dynamic.

But these episodes are fleeting — weeks or months, not structural shifts.

… But When Money Floods the System The Correlation Goes Positive

Then come the liquidity waves. In the aftermath of crises, policymakers unleash stimulus. Real yields collapse, credit expands, and everything rallies.

From 2020 to 2022, gold, the Nasdaq, high-yield credit, and even cryptocurrencies climbed in unison.

That’s not risk appetite — that’s monetary overflow.

The Wall of Money

At the heart of today’s market is a wall of money unlike anything in modern history.

The U.S. money-market complex now holds roughly $7 trillion in retail cash, earning up to 5 % yields yet still waiting for opportunity.

Much of this liquidity traces back to the post-Covid fiscal deluge: between 2020 and 2022, Washington spent roughly $5–6 trillion (about 25 % of GDP) to stabilize the economy.

That cash has not fully drained — it’s sloshing through every asset class, from Treasuries to crypto.

As long as this reservoir persists, correlations will remain distorted: traditional “risk-on” and “risk-off” distinctions blur under the sheer weight of liquidity.

Bottom Line

Gold isn’t the anti-Nasdaq trade — it’s the anti-real-yield trade.

Both assets thrive when money is cheap and policy is loose, and both struggle when real rates rise.

The persistent near-zero correlation between them isn’t a contradiction — it’s a signal:

Liquidity, not sentiment, is running the show.

For traders, that signal is difficult to interpret. On one hand, fundamentals and macro conditions look increasingly bearish: the Nasdaq trades at multiples typical of late-cycle peaks, and the economy is slowing under sticky inflation.

On the other hand, there remains an enormous amount of cash circulating through liquid markets — a wall of money that acts as a buffer against any deep bear phase.

Historically, such environments resolve not with an “if” but a “when.”

Eventually, excess liquidity meets deleveraging — and the U.S. economy is highly indebted from top to bottom, from the federal government to households.

For those inclined to short the market, beware. As the old market adage warns:

“The market can stay irrational longer than you can stay solvent.”

____________________________________________________________________________________________________

© 2025 Securities are offered by Lime Trading Corp., member FINRA, SIPC, NFA. All investing incurs risk including, but not limited to, the loss of principal. Additional information may be found on our Disclosures Page. The material in this communication is not a solicitation to provide services to customers in any jurisdiction in which Lime Trading is not approved to conduct business. The material in this communication has been prepared for informational purposes only and is based upon information obtained from sources believed to be reliable and accurate; however, Lime Trading Corp. does not warrant its accuracy and assumes no responsibility for any errors or omissions. The information provided is not an offer to sell or a solicitation of an offer to buy any security or a recommendation to follow a specific trading strategy. Lime Trading Corp. does not provide investment advice. This material does not and is not intended to consider the particular financial conditions, investment objectives, or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.