Monday, March 16, 2009

50 year gold return greater than the stock market

It's official. The 50 year return on gold is greater than the 50 year return on the stock market! If this isn't a condemnation of buy and hold, I don't know what is. An investor has a finite lifetime, he or she doesn't live forever. For most people 50 years would be longer than they would want to stay in the market or at least longer than their earning years last.

WARNING: The following analysis will not be seen on CNBC or Bloomberg and may elevate your blood pressure.

Below is a table of the 50 year returns of the Dow Jones Industrial Average versus that of burying gold in the backyard as of today's (3/16/09) close:

If this doesn't piss you off and open your eyes wide with disbelief, congratulations because you must already be a gold bug! This isn't a better performance by gold, it is a freakin' trouncing. If you don't believe these numbers, I encourage you to do your own homework and verify this information for yourself. After all, why take the risk of owning stocks when gold has no risk other than theft? By the way, gold has also trounced hoarding paper pieces of fiat cash in any currency over the past 50 years by an even greater degree as of today's close.

Score board, bitches. And don't forget that stocks are going lower and gold is going much higher. A long-term (i.e. decades) "swing trade" that will work until we go back to a gold (or other hard-asset) backed currency is to stay out of stocks and in gold until the Dow to gold ratio gets back to one. Once that happens, switch back to stocks (and real estate).

I prefer to trade while Rome burns, so I'm holding a core of physical gold and trading with the rest. One more decent plunge to set up a good divergence in momentum in general markets, then I think we can get a good multi-month rally going.

Wikinvest Wire