Gold Up 150% Since 2000 While US Stocks Keep Falling

US stocks have lost more than US$1 trillion in value in the last three weeks – an amount equal to about 8% of annual GDP. Goldman Sachs (NYSE:GS) – the alpha business of Wall Street – has lost 20% of its value.
 
Of course, no Markets and Money reader should have lost serious money. We have urged readers to avoid US stocks generally (there are exceptions…many of them) ever since the market peaked out early in 2000. Not that we knew what direction stocks would take (we were surprised to see the Dow later going up)…we just saw nothing to be gained by speculating on stocks when they are coming off a record high.
 
In March of 2000 the S&P stood at 1539. Last week, it was barely 1450. Plus, consumer price inflation has steadily eaten away at dollar values. While you might have cashed in US$200,000 worth of S&P shares to buy a decent house in 2000; today, you’d need US$400,000 worth. And while you might have gotten a gallon of gasoline for US$1 in 2000…now, you’ll pay US$3. Just taking the government’s CPI at its word, the dollar has lost about 20% of its value since 2000…which means, your S&P portfolio is down about 25% in real terms.
 
You would have been much better off in gold; it’s up 150% over the same period.

“There is nothing safer than gold because it does not have counterparty risk,” says our friend James Turk.  
 
“In other words, gold is not reliant upon some government promise to maintain the value of the currency they manage. Nor is gold reliant upon a bank promise claiming that your dollars or other national currency are not at risk.”
 
But owning gold is boring. Owning gold is like going to a World Series game and hoping for rain. You are on the sidelines…out of it…a nullifier…a hopelessly old-fashioned fuddy-duddy.
 
Of course, there are times to go with fashions…and times to go against them. Our guess is that this is one of those eras when being a contrarian pays off.

Bill Bonner
Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.
Bill Bonner

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