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Monday, August 22, 2011

Gold Crushed The S&P 500 Over The Past 6 Weeks

Over the past month and a half, gold has *CRUSHED* the S&P 500.

Using GLD as an approximation for gold, GLD closed at $147.63 on 7/5/2011, and GLD closed at $179.95 on 8/19/2011. (GLD does track gold reasonably well.)

SPY closed at $133.81 on 7/5/2011, and SPY closed at $112.64 on 8/19/2011.

That's a 21%+ gain for gold, and a loss of 15%+ for the S&P 500. Overall, gold outperformed the S&P by 44%+ from 7/5/2011 to 8/19/2011. (It's more than 21%+15%, because you multiply 1.218/0.841 = 1.448, instead of merely adding.)

It certainly is possible that the stock market might outperform gold over the next year or two. I'm convinced that gold and silver are a better long-term investment than the stock market.

If gold has a higher expectation than stocks, then you're an idiot to buy stocks instead of gold. Even if you're an expert stock picker, you won't be able to make up the 1%+/month that gold is crushing the stock market.

With stocks you get dividends and earnings. However, there's all the theft and waste and fraud associated with a large corporation. With stocks, the friction is greater than the earnings.

Even though gold has had a great run recently, I still predict that gold will outperform the stock market over the next 5-10 years. Even if you pay a premium of 10%-20% for buying at a local minimum, any losses relative to the stock market should be recovered quickly.

1 comment:

Anonymous said...

steamroller says:
Once again this is evidence of the oldest paradigm: "Man always acts in his own best interest" and the confidence in "the full faith and credit" of the U.S. Treasury is lower than a snake's ass, and that's trailing on the ground.
It now appears that all the Geithner, Bernanke, Dodd, and Frank lies are exposed for all to see, and the phony stock market will yet realize that when everybody wants to sell, all the buyers are out of town. We may soon see Agorism in action!

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