June 8, 2011 @ 3:22 pm
Gold is up over 8% so far this year, not a bad gain for the first 5 months. Meanwhile, the S&P 500 is barely 3% for the year. Gold to date in 2011 outperforms almost every asset other than its little brother silver which is up 22% over the same time period.
It would seem from these numbers silver is the better investment and we believe it will continue to show gains for the remainder of the year. What we are also seeing is silver making these gains in a volatile manner with herky-jerky gains & losses. This volatility may give the conservative investor more grey hair than a two-term President. Our recommendation, buy silver and hold on for dear life.
Gold’s story is more of the same, demand as a safe-haven investment, inflation worries, EU bailouts, & QE2 phasing out by the end of the month. Gold is more valuable at this juncture as the flight to quality accelerates, Stephen Weiss of Short Hills Capital told CNBC. Global equity indices will all be in decline as multiple growth engines sputter: US, China, Eurozone and Japan. Only place is commodities, and specifically gold, because that is where perceived safety and momentum will be.
Over the last 80 years, gold has traded, on average, about 1.5 times the S&P 500 at it’s current level of $1284.82 gold should make a run to $1927.23. This gain potential still makes gold an attractive investment with another 25% to reach the norm. Brian Kelly of Brian Kelly Capital commented on CNBC, Gold is a currency and its re-monetization is accelerating. Stocks will not perform well in a stagflationary environment. China’s next export is inflation, with a slow growth global economy profit margins will get squeezed. This should cause stocks to retract some but even with a 5% loss in the S&P 500 over the next 7 months gold would still end the year over $1800.
This makes now the time to acquire gold & silver in your tangible asset portfolio. Gold will make its way back into sync with stocks allowing for potential gains keeping golds decade bull run moving into a second decade. David Greenberg of Greenberg Capital agreed on the bull run telling CNBC, Gold is the only asset that has held value over time.