WE WIN! This week's chart is of ten year returns on $Gold (7.4% compounded annually) and U.S. paper equities (6.1% total return compounded annually). As the chart shows, the place to have had your money for past ten years has been Gold. These results will no doubt be kept a secret from many investors. Many money management activities are about generating fees, not providing performance. Why tell clients they could have earned more money somewhere else? Is that not one grand and glorious graph! We won, and paper asset are in second place. Remember what they say about second place. Second place is first loser! Will CNBC keep this a secret from investors?
Selling Gold during this ten-year period was not wise. Gold's superior performance was due to structural nature of U.S. dollar's problems. For that reason, no sell signal has been issued by this or other enlightened writers during this ten year period. The structural nature of dollar's problems continues in place. U.S. exports about $60 billion of green paper every month to pay for oil and consumer goods. That is not going to change. Are factories going to be moved to North Carolina from China? Can U.S. export sufficient volume of services, haircuts or internet searches(yawn), to cover deficit? Perhaps foreclosed housing could be converted to kits, and exported to China. Structural deficit of U.S. means dollar will continue to depreciate, providing the fuel for Gold Super Cycle.
GOLD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly. For a subscription go to http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html. Ned will be exploring the Gold Super Cycle at The Wealth Expo in NYC, 19-21 October. For information go to www.wealthexpo.net. To receive a copy of the new Agri-Food Value View, an exploration of Agri-Food Super Cycle, write firstname.lastname@example.org.