Several years ago, Simon Maierhofer, editor and founder of iSpy ETF Newsletter, introduced me to a combination of three barometers that have had interesting results in predicting the future S&P 500 performance of the new year. These three barometers are monitoring the performance of the S&P 500 during specific days of the prior year, December, Christmas, and the new year. These three periods make up what is known as the “Santa Claus Barometer”. The specific days for this Santa Claus barometer are:

• Santa Claus Rally (SCR) – Prior Year December 26 to 31

• First Five Days of Current Year January (F5D)

• Current Year January Barometer (Jan)

Certain combinations of the returns during these three periods have had very high success in predicting the future outcome of the S&P 500. For example, only 19 times since 1970 have all three periods had positive returns. However, 100% of the time when these three periods were positive, the S&P 500 ended the year remarkably with a positive return. The most recent occurrence was in 2019, when the S&P 500 soared 28.9%.

Unfortunately, the Santa Claus Barometer did not provide a clean indication for 2024. Here is how the S&P 500 performed during these three periods:

• SCR: -0.4%

• F5D: 1.1%

• Jan: 1.4%

However, looking back to 1970, there were three other occurrences when the S&P 500 was negative for the SCR and positive for F5D, and the month of January, with the most recent occurrence just last year. Below is how the S&P 500 performed in the three prior periods:

• 1980: 25.8%

• 1994: -1.5%

• 2025: 16.39%

Three period average 13.56%

Unfortunately, the three prior periods do not provide enough frequency to predict 2026. However, 76.79% of years had a positive gain for the year when the S&P 500 gained in January. For a fun barometer that has some consistency, it is nice to start the year with a positive omen. Below is the entire chart for Santa Claus Barometer periods going back to 1970, with the three years highlighted with the same experience as this year.

US STOCK MARKET

Since peaking on October 29, 2025, the S&P 500 and NASDAQ have traded in a largely flat range. Over this period, the indices have changed by approximately 0.4% and -2.94%, respectively. Despite this sideways movement, the underlying fundamentals of the U.S. economy and the consumer remain intact, and the fourth-quarter earnings season has been solid.

This three-month consolidation may be constructive, providing a base for the next positive trend. After three consecutive years of strong market gains, it is common for institutional investors to rebalance portfolios, realize profits, and reposition capital for new opportunities. We will report on the results of corporate earnings over the next couple of weeks.

SILVER AND GOLD

The torrid rise in gold and silver spot prices that began in late 2023 extended into 2026, peaking as recently as last Thursday. On Friday, however, the elevated prices in both metals reversed sharply as investors moved aggressively to sell. Weekend speculation attributed the selloff to month-end portfolio rebalancing and profit-taking.

From Friday through yesterday, gold spot prices declined $754.28, or 13.9%, to $4,660.20. Silver, which significantly outperformed gold throughout 2025, predictably experienced a more severe pullback in 2026. Silver prices plunged $37.33, or 32%, reaching a low of $79.28. Today, both metals rebounded, with gold up 5.91% and silver rising 7.36%.

As I have often noted to our clients, my experience suggests that gold, silver, and mining stocks are generally not long-term buy-and-hold investments. From 2016 through December 2023, gold delivered an annualized return of 6.53%, while silver returned 5.98%. Over the same period, the S&P 500 and NASDAQ produced significantly higher annualized returns of 12.73% and 17.03%, respectively.

That dynamic changed beginning in January 2024, when precious metals entered a powerful rally and, following President Trump’s return, surged to spot prices never previously recorded. Over the past two years, gold has gained 139.84%, equating to an annualized return of 55.19%. Silver surged even more dramatically, rising 260.32% for an extraordinary annualized gain of 90.56%—nearly a double-double in just two years.

Below are charts of gold and silver spot prices over the past two years, with the S&P 500 shown for comparison in blue.

Gold miner stocks in our portfolios also experienced a significant rise in stock price up through Thursday, with Gold Fields (GFI) soaring +40.88% through Thursday. However, the miner stocks followed the precious metal spot price decline but remain positive, with GFI closing today with a YTD gain of a mere 20.27%.

The global investor fear gauge remains unusually elevated, driven by ongoing geopolitical tensions involving Russia and Ukraine, as well as Israel, Gaza, and Iran. Since President Trump’s inauguration and the implementation of his aggressive policy agenda, these tensions have intensified further. I do not expect investor anxiety to subside this year, nor do I anticipate any near-term change in President Trump’s governing approach.

Against this backdrop, today’s rebound in precious metals and mining stocks is encouraging, as it suggests renewed investor interest in rebuilding portfolio exposure. At this time, we will continue to hold positions in precious metal mining stocks.

What Does This Mean to Me?

We maintain a favorable outlook on both precious metals and U.S. equity indices. While we expect heightened volatility this year, driven by policy developments in Washington and ongoing geopolitical events, we view these disruptions as potential buying opportunities. This approach will remain in place unless there are material changes in economic fundamentals, employment conditions, or consumer health.