Simon on CNBC just reported gold's huge under performance versus stocks and that its headed for its worst year in 13 years! Wow, that sounds terrible. Why would I want to be in gold with such bad news?
Let's take a look at just how "bad" its performing:
The S&P 500 is currently up nearly 12% year to date but is down year over year by 2.3% as represented by the exchange traded fund SPY.
How has gold done?
The gold price, as represented by the exchange traded fund GLD is UP by 6.7% year to date. Its also UP 1.4% year over year.
Is gold under performing its double digit returns of the last 12 years? Yes, so far it is, but things are getting scary again in Europe and I strongly suspect the end of year performance will be quite comfortable for those trying to protect their wealth.
I would further note that the volatility, or what we describe as risk in the investment community, has been much lower for gold. So gold has provided consistent returns without much volatility compared to the S&P 500 that is prone to wild swings.
These are the facts, but you would never know it from watching the stock cheerleaders on CNBC.
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