The recent plunge in the gold market has triggered a wave of collective selling. Spot gold has fallen below $4,300 per ounce, and silver has also dropped 5%, with most people shouting sell. But a long-term commodity cycle analyst, Kevin C. Smith, sees a different story.

He recently published a series of analyses with a very interesting core point — now is the opportunity to buy gold mining stocks, even suggesting investors sell S&P 500 index funds to rotate into them. It sounds a bit bold at first, but he backed up this judgment with historical data.

He looked back at the market performance during the 1973 Yom Kippur War. At that time, oil prices surged 287% in early 1974, while the S&P 500 dropped 43.6% from its high. During the same period, gold mining stocks (XAU index) rose 165.8%, and large-cap stocks fell 31%. A year after the war, gold stocks still gained 87%, while the S&P 500 was still at the bottom. This comparison is quite striking.

His logic is this: when inflation hits, especially inflation driven by oil prices, traditional stocks and hard assets will sharply diverge. Capital will flow from overvalued U.S. stocks into gold and mining stocks.

Looking at the current situation, since Israel and the U.S. launched missile strikes on Iran on February 28, West Texas crude futures have already risen 46.7%. This resembles the energy shocks of the 1970s. But strangely, CNBC reports that amid fears of inflation worldwide, gold and silver are actually being sold off.

Smith finds this interesting. Normally, inflation expectations (especially rising oil prices) should benefit gold and mining stocks, but now they are falling. His interpretation is: this is not a reversal but a shakeout. U.S. stocks are still trading at high valuations, and the timing for capital rotation from stocks to mining stocks has already matured.

His straightforward advice: sell S&P 500 funds and buy gold mining stocks. This is a direct bet on history repeating itself. His logic is based on two points: first, rising oil prices will suppress corporate profits and stock valuations; second, historical precedents show that in such environments, gold stocks will outperform other assets significantly.

Of course, this is just one analyst’s view. But in times of uncertainty in both gold and stock markets, this historical perspective is worth considering.