Global Currency Crisis & Gold – What’s Really Going to Happen in 2011 – 2012

Following on from the first 2 parts in this series: Whats really going to happen in 2010 Whats going to happen in 2010/2011 – part II Another great writer and analyst makes it into our categories section, Bob Chapman of Global research with a seminal must read piece outlining the road ahead towards a new [...]

Gold is the Best Investment of the Decade

by admin on 28/12/2009

Firstly we would like to echo the sentiments of the the quoted article below from the Market Oracle here

Happy holidays wishes to all, with a special season’s greetings to the permanent gold skeptics.

A little while ago we asked ” Is Gold is a good investment?”  ..well here’s the truth, it’s not only a “good” investment, it’s definitely the best call you could have made this decade, as the article and chart below shows.

The decade that ends Thursday is on track to be the worst in recorded history for the U.S. stock market – worse than all of the many boom-and-bust cycles of the 19th century, worse than the Great Depression-era 1930s, worse than the recession-plagued 1970s

The S&P 500 opened the decade at 1,469.25 on January 3, 2000. When the market closed on Christmas Eve, the S&P 500 stood at 1,125.46 – with four trading days left in the decade, the index’s annual performance over that span is negative 2.6 percent.

The Dow Jones Industrials has lost about 1 percent per year over the same period, and the Nasdaq Composite is down a whopping 5.9 percent annually. When adjusted for inflation, the 10-year returns for these indices are even lower.

Meanwhile, what about gold?

The chart below from Bloomberg tells the story – a $100 investment in gold when the market opened on January 3, 2000, was worth about $380 as of this week (data through December 21) – that’s a total return of 280 percent and an annualized return of 14.3 percent.

Gold stocks (as measured by the XAU Index) have also had a good decade, climbing 9.4 percent annually.

Commodities (as measured by the S&P GSCI Enhanced Total Return Index) posted average gains of 13.6 percent per year over the period, driven mostly by rapid economic growth in Asia and elsewhere in the developing world.

There are many commentators out there who see no value in gold and who denounce it as an investment at every opportunity. They are certainly entitled to their opinions, but it’s hard to argue with the numbers over the past 10 years – investors on average would have been better off with a gold allocation than having no exposure.

We consider gold a legitimate asset class, and for that reason, we consistently suggest that investors consider a maximum 10 percent allocation to gold-related assets – half in bullion or bullion ETFs and the other half in gold equities – and that they rebalance each year to capture the swings.

What the next decade will bring for gold?

- Who knows. But we do know one thing – those who owned gold for the past 10 years will have a much happier New Year than those who listened to the perma-skeptics.

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{ 2 comments… read them below or add one }

tom December 29, 2009 at 14:57

I don’t know – I personally think NOW IS THE TIME SELL. Gold has reached all time highs and you know there will be a correction eventually! But be careful if you do decide to sell on where you go to sell it. The online companies pay way more than the local guys! Be these online companies have become scammers – giving you way less than your items are worth, not allowing you to reject the offer, etc.
So – check out the Silver And Gold Exchange. They’re the most reputable out there and have ZERO complaints! That says a lot in this industry! PLUS THEY PAID THE MOST!! Very honest company.
http://SilverAndGoldExchange.com/dontfollow

admin December 31, 2009 at 13:39

Hi Tom

We would respectfully have to disagree with you about what you should be doing with Gold, but of course we’re on opposite sides of the fence.

The fact that there are so many companies such as yours springing up to take advantage of the last decade’s Gold price rises, by persuading hard-up members of the public to part with their gold, only reinforces our opinions.

These companies make profits on this gold people sell too cheaply, otherwise they would / could not exist.

You are correct in that there will be a correction one day, but it will be from a price very much higher than it is today, ie after the bubble does burst.

The point here is that we are NOT in the bubble yet, because if we were, members of the public would NOT be letting their gold go cheaply to companies such as yours today, because they would all know, en masse, that Gold will be worth more tomorrow than it is today, exactly the same as real estate (used to be presumed to only go upwards)

Only when the general public are all major buyers of Gold (several years time at the earliest) and the unstoppable Gold Bull Market has run it’s full course, will it be time to be thinking about selling..

… until then it is BUY BUY BUY. (after all you are buying, are you not? :) )

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