All NewsMarch 29, 2026

Morgan Stanley delivers stark take for gold, stock market investors

Gold was supposed to shine when everything else got messy.

However, over the past three weeks, the opposite has occurred, and Morgan Stanley believes that’s a major bullish signal for stocks.

Since the Iran war began on Feb. 28, gold prices have taken a dive, falling an incredible 18% and slipping into bear-market territory, Business Insider reported. Over the same period, the S&P 500 has held remarkably better, falling less than 4%.

That divergence is one display in a critical metric Morgan Stanley is watching closely in the S&P 500-to-gold ratio.

That ratio surged nearly 12% since the conflict started, per the bank’s Chief Equity Strategist Mike Wilson, a move he hails as “one of the more constructive recent market developments.”

As it stands, it’s pretty clear that the capital is rotating toward stocks and not hiding in safe havens.

Morgan Stanley also feels that the shift essentially cuts the popular narrative that markets are downplaying the geopolitical risk. 

As even in the fog of war, we’re seeing the broader resilience of the U.S. economy.

That runs counter to recent pieces I’ve written about the economy, which have taken a much more somber tone.

For instance, BlackRock’s Larry Fink warns oil might hover above the $100 mark, and even push past $150, resetting recession risks in the process. Similarly, Goldman Sachs bumped its U.S. recession odds to 30% on the back of elevated energy costs, weaker jobs data, and fading policy support constricting growth. 

SPDR Gold Shares vs. SPDR S&P 500 ETF Trust returns

  • SPDR Gold Shares (GLD) versus SPDR S&P 500 ETF Trust (SPY) YTD: 1.09% versus -5.40%
  • 3 months: -3.86% for GLD versus -6.55% for SPY
  • 5 months: 9.16% for GLD versus -5.86% for SPY
  • 1 year: 43.99% for GLD versus 13.45% for SPY
  • 3 years, annualized: 29.36% for GLD versus 19.49% for SPY Source: FinanceCharts adjusted-close and trailing-performance data through March 26-27

What is the S&P 500-to-gold ratio?

Morgan Stanley essentially watches the S&P 500-to-gold ratio as a mood ring for markets. Calculating the ratio is pretty simple, where you take the level of the S&P 500 and divide it by the price of one ounce of gold.

Consider it like a seesaw where when stocks hold up and gold slips, the stock side tends to jump. 

If we take the S&P 500’s March 26 close of 6,477.16 and the Friday, March 27, spot gold at $4,416.90 an ounce, the ratio equates to around 1.47.

More Gold:

Since the Iran war began, the ratio has fluctuated hard. On March 10, when gold hit $5,231.79, and the S&P 500 closed at 6,775.80, the ratio was closer to 1.30, Reuters noted. 

Typically, the ratio moves in longer arcs. 

Stocks obliterated gold from 1980 to 2000, but then gold dominated from 2000 to 2011, and stocks regained the edge from 2011 to 2021. 

A key market signal is shifting, and Wall Street is paying close attention.

Photo by OsakaWayne Studios on Getty Images

Morgan Stanley strategist Mike Wilson makes a bullish case for stocks

Wilson treats the king metal’s recent sluggishness as more of a read-through on how investors are pricing in the current macro backdrop, per Business Insider.

“One of the more constructive recent market developments is that the S&P in gold terms has shot higher by 12% since the conflict began three weeks ago,” Wilson said.

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His broader point is that the message coming from gold at this point cuts against the dominant narrative.

“The sharp fall in gold is perhaps the best signal that momentum is moving in favor of the U.S. in this conflict more than the popular view would suggest.”

In other words, investors are essentially looking to dial back on their worst-case assumptions.

Moreover, Wilson argued that the increase in the ratio is “a favorable sign that the cadence of U.S. economic and earnings activity will likely remain constructive throughout this conflict and after it simmers down.”

The damage doesn’t compel the bank to materially change the bottom-line forecast. This implies the bank does not yet see enough damage to materially rethink the profit outlook.

Additionally, the core thesis remains intact: Amid rising geopolitical stress, the market hasn’t discounted resilience. 

Some governments are starting to tap gold

As Wilson suggested, we are seeing a few countries seeking liquidity, but that hasn’t been a broader trend.

  • Turkey is the clearest example. According to Reuters, gold reserves fell by roughly 50metric tons last week to 772 tons, the largest weekly decline since August 2018.
  • Poland shows the idea is spreading. Policymakers have floated the idea of potentially using windfall profits on gold holdings worth roughly 197 billion zlotys ($53.75 billion) to help fund defense spending, per Reuters.
  • Still, this is not a broader central-bank exit.The World Gold Council said that central banks remained net buyers of 5 tons in January, though at a much slower pace than the 27-ton monthly average in 2025.

Wall Street price targets for the S&P 500

Wall Street’s targets on gold

What investors should do now?

For investors, clearly the takeaway is that the risk hasn’t vanished, but the stock market’s handling it a lot better than feared. 

Gold’s technical picture has weakened, though, with the safe-haven metal down north of 20% from its January peak of more than $5,600 an ounce, putting it in bear-market territory.

In contrast, the S&P 500 has held up far better, and the index has become much more attractive from a valuation perspective during this stretch.

Perhaps the best here is the one Franklin Templeton’s Chris Galipeau laid out recently in a LinkedIn post.

He argues for investors to stay diversified and disciplined, without letting the headlines dictate allocation.

He lays out the case for broad U.S. stock market exposure across large-, mid-, and small-caps, with growth and value balance. 

In navigating without taking up too much risk, Galipeau says that if the VIX closes above 30 weekly, dollar-cost average. If it pushes above 50, it would be wise to start scooping up quality stocks on weakness.

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