S&P 500/Gold Correlation Spikes

A few months ago, gold and stocks were moving in the opposite direction of each other on a daily basis.  Recently, however, the two have been moving more and more in lockstep.  This week, both gold and the S&P 500 have fallen pretty significantly, causing gold bugs who bought for the "fear trade" to scratch their heads. 

Below is a chart of the rolling 50-day correlation between the S&P 500 and gold going back to 2007.  If you look at any point on the chart, it shows what the correlation was between the daily percentage changes of gold and the S&P 500 over the prior 50 days.  As shown, the 50-day correlation has spiked significantly over the past couple of months, meaning the two have been moving more and more inline with each other.  Interestingly, the correlation was even higher back in early 2010.  Since then, the correlation has swung pretty wildly back and forth between positive and negative.  If the recent trend continues, the correlation is due for a swing lower pretty soon.  This means either gold will go up and the market will go down, or vice versa.