RUSSELL LYNCH: Does stuttering gold offer clues to end of this FTSE 100 rally?

IT’S the oldest saying in the book, but the reason why “sell in May and go away” still gets an airing is because it usually works: in all but two of the past 50 years, it would have made you money.

And as the FTSE 100 index reaches record highs again this week — capping the most unloved, mistrusted stock rally in history — there are warning signs for cautious investors that it might be time to get off the bus.

Investors in the blue-chip index have had double bubble since the middle of March: higher oil prices and a falling pound as the Bank of England rowed back from a May interest-rate rise.

Brent crude at $80 a barrel wasn’t in most analysts’ forecasts this year. Easy money from central bankers might just as well be pumped into shares as anything else.

But if economic prospects were so great and oil prices are soaring, surely people would be channelling cash into gold as a hedge against inflation?

Since the turn of the millennium, commodity prices have usually moved higher broadly in lock step. But the gold price has been dipping lately.

And it followed a similar pattern when oil prices were much higher in the summer of 2008, say analysts at BNY Mellon. Gold fell by nearly a quarter in the two months before Lehman Brothers collapsed.

It may simply be that investors are seeking higher returns than gold offers elsewhere. But in a world where rising oil prices and tightening central banks show signs of curbing the economy, it could also be a bet that inflation hedges are the last thing we’ll need.

Time to tread cautiously.