For the past ten years gold investments have thoroughly pummeled stocks. Posted by James Randolph on December 27, 2010
Are stocks really a better investment than certified gold?
December 27, 2010 – For the past ten years gold investments have thoroughly pummeled stocks, but stock traders are pulling out all the stops to convince us otherwise. After all, without our money their extremely lucrative casino would have to close its doors. But it is hard to win a case that has no merit.
One of the more popular tricks used to play down gold’s performance is to pick the perfect baseline, the $850 per ounce peak in 1980. But that is statistically meaningless because gold went over $800 on only two days that year, Friday January 18, when the high was $830, and the following Monday when it hit the peak. The average high for the month was a far more conservative $678 and for the year it was $613.
It makes a lot more sense to look at what gold investments have done since the early 1970s, when the metal was disconnected from the dollar and allowed to seek its own fair market value. Since that time gold investments have turned in remarkable numbers, but that should be expected. In the truest sense gold is money with timeless and consistent intrinsic value and offers the best gauge with which to evaluate all other assets.
If we define one gold to be the value of one ounce of gold, the price of the Dow 30 has fallen from 20 golds in 1972 to eight golds today. $10,000 cost 219 golds in 1972 but today is worth a paltry 7 golds. That is an interesting exercise for sure, but is it of any practical use? Most definitely.
The global debt crisis is reaching critical mass and very soon hyperinflation will become unavoidable. Referencing asset values to gold makes that crystal clear. It is equally clear that investing in certified gold can protect us from the inevitable.
Senior Staff Writer – Certified Gold Exchange