The large majority of gold investors are gold bugs and suffer from the tragic flaw of tunnel vision.
What is a gold bug?
Simply put, a gold bug is an investor who dislikes paper money or fiat currency. Similarly, a gold bug wants the economy to return to the gold standard. Not surprisingly, a gold bug typically believes in conspiracy theories that allege manipulation of gold and silver prices to the detriment of everyone.
In fact, gold bugs are widely dismissed as crazy and their belief resulted in lack luster investment returns over the years.
Notable Gold Bugs:
- Jim Sinclair
- Peter Schiff
- Bill Murphy
- Gregory Mannarino
- Michael Pento
….. to name a few
What I find fascinating is how these guys repeatedly to tell people to buy gold. Regardless of the prices trend, balance sheets or anything other than their ideology.
Unfortunately, this has been devastating to investors who have blindly followed their recommendations.
Then again, these so called “gold experts” have been telling everyone to buy gold for twenty plus years.
Indeed, this begs the question – have they been right? For example, has gold outperformed stocks?
Well, let’s crunch the numbers….
In order to accomplish this analysis we’ll look at the SPY, GDX and GLD. Next, we’ll chart out the performance since July 3, 2006 to January 4, 2021. I chose the dates randomly and there has not been any stock splits.
So, over 15 years the returns are as follows:
Conclusion
As shown above stocks as represented by the SPY is the clear winner. Another key point is the dreadful performance of gold mining stocks. On the other hand, gold bugs may find some comfort in gold bullion.
So much for gold being a safe haven. Perhaps Bitcoin is the new safe haven investment vehicle.
In the end, a broadly diversified portfolio of stocks has proven to be a better investment compared to gold and gold mining stocks. Despite this fact, gold bugs continue to suffer needlessly and spout their nonsense.
Should You Buy Gold Right Now?
Strictly looking at technical analysis the answer in NO!
When gold mining stocks show signs of life I will post a chart identifying the breakout. But for now stay on the sidelines.
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DISCLAIMER: Content provided in this article is for informational and entertainment purposes only. This article is not legal and/or investment advice. This article should not replace professional investment advice based upon your particular situation. Duties are not assumed, intended or created by this communication.
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