Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stocks or Gold, What's Real?

Commodities / Gold and Silver 2010 Aug 10, 2010 - 02:30 PM GMT

By: Steve_Betts

Commodities

Diamond Rated - Best Financial Markets Analysis Article"It is my opinion that the use of this barbarous weapon at Hiroshima and Nagasaki was of no material assistance in our war against Japan. " - "The lethal possibilities of atomic warfare in the future are frightening. My own feeling was that in being the first to use it, we had adopted an ethical standard common to the barbarians of the Dark Ages." --- William Leahy, Chief of Staff to Presidents Franklin Roosevelt and Harry Truman -  I Was There, pg. 441.


We’re going to go at it from a different angle today, stepping back away from the everyday chatter, to take a look at a series of historical charts. There is a lot of misinformation about what makes money and what doesn’t, and about what constitutes risk and what doesn’t. I think if we focus our attention on months and years, instead of minutes and hours, we may actually learn something. One of the so called market truths I want to look at is this idea that stocks go up over a long period of time, so you simply buy them and put them away in order to make money. They point to how the Dow has risen over the decades as proof that stocks are a good long term investment. Simply put, that is a big lie! What follows is a list of the current Dow 30 stocks:

Notice the emphasis on the word current. I do that because these weren’t the Dow 30 stocks ten years ago. Below I have a list of the Dow stocks that were weeded out over the last decade:

Anyone who bought the list back in 2000 suffered significant losses with General Motors and Citibank as they became penny stocks. Now I’ll go so far as to assume that you have “second sight” and you bought the current list back in 2000. You still would have lost money because the Dow opened the decade at 11,400 and is currently trading at 10,610 as of 12:30 pm EST. I suppose you could claim that dividends would have made up for some of the loss but the average dividend yield is a 2.5% and I could have purchased a ten-year treasury back in 2000 that paid 5% or more and my capital would have been “guaranteed”. So stocks came up short in both price and yield.


If that’s the case maybe bonds were the solution. It's true that bonds did rally from 99.00 back in 2000 to their current level of 129.00, for a gain of 23.23%, plus interest paid out every year. Assuming 5%/year and you’re looking at 62.88% interest earned for the decade. On the surface it sounds like a good deal, and it certainly is better than stocks.

There is always the alternative of cash; as they used to say back in the 30’s and 40’s, cash is king. Obviously if you would have left your money in a savings account back in 2000, earning a miserable 2% per year, your capital would have been safe. Right? Wrong! Take a look at the monthly chart for the US Dollar Index below:     

This Index stood at 105.00 in early 2000 and is now at 81.00 meaning that the US dollar has lost 29.2% of its real value over the last decade, and that was probably more than the interest earned. Now stop and think about the stocks and bonds denominated in US dollars. What was a small loss in stocks in now 29.2% bigger in real terms and the gains in bonds were more than cut in half by the decline in the value of the greenback. So stocks ended up the big loser, cash lost a little, and bonds probably gained 30% for the decade; not exactly the stuff fortunes are made out of.

So if paper assets didn’t exactly set the world on fire over the last decade, what did? The answer is not blowing in the wind my friend, instead it’s found in a “high risk” and “barbarous relic” known s gold! It’s been in use for thousands of years, and that’s thousands of years more than fiat currency, bonds, or stocks. Over the last ten years it has moved from a 1999 low of 252.50 to the current price of 1,199.00 and it’s on a ten year winning streak. Almost no one talks about the yellow metal and those that do usually give you ten reasons not to own it. Renowned guru Robert Prechter of Elliot Wave fame has been calling or gold’s demise for five years, he’s been dead wrong for five years, and yet everyone hangs on his every word. Go figure! Too make matters worse, even less people own it than talk about it.


For those of you who think that gold rode the back of commodities, you would do well to think again. Take a look at the following monthly chart of the CRB Index:

Commodities topped in June 2008 and have been struggling every since while the price of gold moved from 800.00 to 1,200.00 over that same period. That’s a 50% gain for those of you who are a bit rust with your math. This serves to highlight what I going on with gold, and is being missed by just about everyone. Gold is rallying in spite of weakness in commodities and paper assets, it is rallying in every major currency, it rallies whether the dollar rises or falls, and it is the only real store of value that is making real money in real terms over a decade. That’s a little known fact that no one seems to talk about on TV. In conclusion I find it truly amazing that I could the pull the name of some NASDAQ stock out of a hat, valued at 60 times earnings, and have clients lined up to buy it based on a balance sheet that reads like bad fiction. Those same folks rode Enron all the way down! Yet something like gold, that’s stood the test of time, won’t even get a second look. That’s why my best advice is to buy gold (and silver)!  

[You can contact us at our new e-mails, info@stockmarketbarometer.net (general inquiries regarding services), team@stockmarketbarometer.net (administrative issues) or analyst@stockmarketbarometer.net (any market related observations).]

By Steve Betts

E-mail:  analyst@stockmarketbarometer.net
Web site: www.stockmarketbarometer.net

The Stock Market Barometer: Properly Applied Information Is Power

Through the utilization of our service you'll begin to grasp that the market is a forward looking instrument. You'll cease to be a prisoner of the past and you'll stop looking to the financial news networks for answers that aren't there. The end result is an improvement in your trading account. Subscribers will enjoy forward looking Daily Reports that are not fixated on yesterday's news, complete with daily, weekly, and monthly charts. In addition, you'll have a password that allows access to historical information that is updated daily. Read a sample of our work, subscribe, and your service will begin the very next day

© 2010 Copyright The Stock Market Barometer- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

daddy warbucks
11 Aug 10, 05:44

It's pretty much common knowledge we're in a 'rigged' market, unless you're part of the rigging what fool would play?

Gold and silver price suppression is also pretty much a known fact and even all the kings men can't hold back this in coming tide. Their big dyke is even now cracking, boy what a buying opportunity!

Any other fiat traded asset to be held; from real estate to bonds are toast. (Oil and drugs and weaponry aside)


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules