Gold Beats Stocks
Gold followed silver tonight with a historic price move. For the first time ever, we crossed $5,000 per ounce of gold. What a rally.
Over the past five years, gold is up +170%. Over the last decade, we’ve seen a massive +350%, and in the last six months alone gold surged +50%. With this performance, the shiny metal has clearly beaten the S&P 500, which delivered only +90% over the past five years and +9% over the last six months.
The price is rising for several reasons. One short-term trigger is the growing fear of another U.S. government shutdown, which likely sparked the latest move. More important in the long run is that central banks and large global players have been accumulating gold for years while reducing exposure to U.S. bonds.
The biggest player here is China, which has almost halved its U.S. Treasury holdings over the last decade, from $1.32 trillion to $0.68 trillion by the end of last year. Gold increasingly appears safer than bonds issued by a country that is now heavily indebted.
It will be exciting to see how far this rally can go. Bank of America recently said we could see $6,000 gold as early as this spring. For now, I don’t see any change in momentum. But at some point, this rally will break. We’re already seeing clear signs of euphoria among investors, and that’s often where turning points are born.
We’ll see.
What do you expect from here guys? Gold shining like a doped bunchnof light bulbs or will it fade again after this hype?
