In two related stories in the final weeks of 2011 the WSJ took a couple of shots at gold buyers essentially taunting them as dooms-day conspiracy theorists akin to Ted Kaczynski. They reported on golds performance against T-bills one of the few areas out side of individual stocks that gold actually underperformed. Then followed it up on the last day of the year with another similar story how the Dow tied gold in performance for 2011.
All of this is true. While they did gloss over the decade long gains in gold over 540% since 2002. They never made the correlation that this far outperformed the Dow by a factor of 10 & T-bills are barely above record lows. T-bills are still near historic lows reached in the first quarter of 2011.
So the real story? Due to declines in the markets over the previous 5 years compounded with the two debt crisis in the US & Europe gold out-perform on an annual basis until this year. Gold will continue to act as liquidity in times of crisis when wall street needs to cover margins & losses. It should also be a portion of a fully diversified portfolio,conservatively 10% to an aggressive %20 of your net portfolio. Even the 1% use gold as financial insurance to cover during the worst of financial crisis’s like they did in 2009. Don’t be caught with out gold protecting your investments & providing much needed liquidity in times of economic trouble.