A personal look at timeless portfolio insurance.
| Gold vs. Equities Since 9/11 |  |
 |
 |
| Written by Pat Norton |
| Friday, 07 November 2008 00:00 |
| Gold’s performance as an investment in recent years has been impressive by any standard—and not least when compared with equities. Even allowing for the recent decline from around $900 to around $750 an ounce, gold has doubled or tripled in value since the Millennium, depending on what dates you choose to compare gold prices.Equities, on the other hand, have unfortunately proved the old adage that stocks are highly volatile, so you have to be prepared to hold them “for the long haul.” Compared to the highs the stock market hit only about a year ago, the recent decline of about 40 percent in equities wiped out roughly $8 trillion in wealth, including some $2 trillion in retirement accounts.But perhaps, you might suspect, it is misleading to measure such losses from last year’s all-time peak stock values.A more forgiving comparison would begin with the S&P 500’s post-2000 low of 776.8 on October 9, 2002, in the wake of the dot-com bubble and of 9/11. Six years later, as of November 6, 2008, the index was only about 130 points higher, at 904.9.
That made for an anemic six-year rise of 16 percent—relative to the index’s lowest level of the decade. In short, and as the chart illustrates, a one-dollar investment in an S&P 500 index fund in late 2002 would have been worth $1.16 on Thursday. A one-dollar investment in gold would have been worth $2.36.
Putting it another way, people who had made gold a part of their investment portfolio were better protected against the stock market’s volatility than those who had not. Does that suggest that you should now buy gold? Not necessarily. In our view, the purpose of owning gold is to have money, not to make money. Attempts to time the market for gold are likely to fail, exposing the investor to the risks of buying high and selling low. But suppose you wanted to buy gold to diversify your portfolio—or simply to have gold as an asset? Call The Superior Gold Group and find out How to Hold Gold and Build Wealth that you can touch with people you can TRUST at 888-969-6465. They will show you several practical approaches, each with strengths and weaknesses. The first two are buying gold coins or, the vast array of choices in precious metals.
|
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment