Two ratios do all the work on the Gavekal page. One compares the S&P 500 with oil. The other compares Treasury total return with gold.
Both are measured against their own seven-year moving averages. Put the two answers together and you get one of four quadrants. Compact, yes. Complete, no.
The boom and bust axis
The growth axis divides the FRED S&P 500 price index by FRED WTI spot crude oil.
When S&P 500 divided by WTI is above its seven-year average, the model labels the axis Boom. Productive capital and equity value are outperforming the cost of a major physical input.
When the ratio is below its average, the model labels the axis Bust. Oil and input costs are taking a larger share relative to equity value.
Do not read this as a GDP forecast. Equity valuations can rise without broad economic strength, and oil can jump because of a supply disruption. The ratio is a market-based efficiency signal, nothing more ambitious than that.
The inflation and deflation axis
The second axis divides a Treasury total-return proxy by gold. The dashboard uses adjusted total returns for the iShares 7-10 Year Treasury Bond ETF and the raw price of SPDR Gold Shares.
When Treasury total return divided by gold is above its seven-year average, the model labels the axis Deflationary. Government duration is outperforming monetary scarcity.
When the ratio is below its average, the model labels the axis Inflationary. Gold is outperforming the Treasury proxy, which can indicate inflation pressure, monetary distrust, or both.
IEF is an investable public approximation. It is not a proprietary constant-duration ten-year Treasury total-return index. GLD is also an ETF proxy, with its own fees and fund structure.
The four quadrants
| Treasury/gold | S&P 500/WTI | Quadrant |
|---|---|---|
| Below average | Above average | Inflationary Boom |
| Below average | Below average | Inflationary Bust |
| Above average | Above average | Deflationary Boom |
| Above average | Below average | Deflationary Bust |
Inflationary Boom often favors scarce real assets while productive capital remains strong relative to energy. Inflationary Bust is the harder stagflationary quadrant. Deflationary Boom can support equities and duration. Deflationary Bust is the classic environment for high-quality government bonds and cash.
Those are regime tendencies, not promises about every asset.
Why completed months matter
The published framework is monthly. A reading from July 10 is not a completed July observation. Classifying it as if the month had ended would let a partial month overwrite a completed signal.
Only the latest completed calendar month can set the active quadrant. The page may show current partial-month ratios as provisional context, but those readings cannot change the classification.
The original ratio framework is described in Gavekal’s General Theory of Portfolio Construction. The dashboard uses public data and documents where its investable Treasury and gold implementation differs from proprietary indexes.
How this affects KISS
It does not. Gavekal is a separate context framework. It can help explain why gold, energy, equities, or duration are behaving a certain way, but it does not change the KISS top-down targets or VAMS multipliers.
That separation prevents one market ratio from being counted twice inside the core allocation.
Reading the page
Read the page in this order: completed observation month, active quadrant, each ratio versus its seven-year average, then the provisional current-month context.
The map earns its keep through clear definitions and consistent timing. Treating two ratios as a complete economic model would ruin the point.