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2008 is now in the
rear-view mirror, with virtually every investor shouting “Good
riddance!” and praying for a better year to come. Forget about making
money, just keeping your head above water was an accomplishment over the past
twelve months.
Consider the statistics (12/31/07 vs. 12/31/08):
Housing – down 18% nationally, by the Case Shiller index, and 30% or
more in most major metropolitan areas.
Domestic stocks? Nope. The Dow Jones Industrial Average – down 33%; Dow
Utilities – down 30%; Dow Transports – down 21%. S&P 500
– down 38%. NASDAQ – down 40%. And if you were unfortunate enough
to have invested in a financial-sector ETF, you lost at least 55%.
Foreign stocks? The Vanguard Emerging Markets Fund, a typical example, came
in at minus 55%.
Bonds didn’t fare well, either, with the yield on 10-year Treasuries
dropping 42%, and 30-year T-Bonds off 38%.
Energy. Uh-oh. Crude oil – down 59%. Natural gas – down 37%.
Industrial metals took a whacking, with copper down 55%, nickel 56%, and
aluminum 37%.
Food did a little better than most, which isn’t saying a whole lot. Corn
– down 17%; wheat – down 24%; live cattle – down 15%.
Enough. You get the idea. Every asset was mired firmly in the red in 2008,
right?
Actually, no. The single exception was gold, which was up 5.6%. A modest gain
in most times, but a phenomenal performance for a year where everything else
tanked.
And if you managed to invest something other than U.S. dollars in the metal,
you did even better. Gold rose 12% in euros, 32% in Canadian or Australian
dollars, and a whopping 44% in British pounds.
Nor is this an isolated phenomenon. In 2008, gold posted its eighth straight
yearly advance. Since the beginning of 2001, it has averaged a better than
16% annual gain vs. the U.S. dollar, 11% vs. the euro, and 17% vs. sterling.
Your financial advisor likely tells you to invest in the stock market and be
patient, because over the long haul stocks will yield an average yearly
return of 9-10%. Well, maybe so. But it sure depends on how generous your
time frame is.
Over the past eight years, gold has added 215% (in U.S. dollars). During the
same period, the S&P 500 lost 22%. The DJIA? Down 11%. In
order to show a profit with a simple buy-and-hold strategy (ignoring all
rallies and dips), you’d have to go back to early 1999 for the Dow, and
1997 for the S&P!
Where was your money in 2008? Or ’07? Or … ?
If you’re a BIG GOLD subscriber, a significant portion of your
portfolio was in physical gold and paper proxies tied to the gold price.
Yes, the gold-producing companies that we follow in BIG GOLD did poorly in
2008, as the frenzied stock sell-off spared neither market nor sector, across
the globe. But we held on through the storm, and the miners have rebounded
sharply in the past month. We expect that they will be stellar performers in
2009, as the coming inflation that’s baked into the American economic
cake begins to break out.
And despite the turmoil of ’08, our readers always had something to
cushion the blow. Gold. We advised buying it and taking it into their
physical possession. When a severe shortage of coins and small bullion bars
developed in the second half of the year and premiums skyrocketed, we showed
subscribers where to buy at the lowest possible markup. For those with
sufficient means, we provided detailed instructions for purchasing 100-oz.
gold bars on the New York Comex.
2008 was a rough year, for everyone. But it’s gone, and if you held
gold and its proxies, you did better than most.
The important question now is: where should your money be in 2009? That’s
the question we address every month in BIG GOLD. Try a
risk-free 3-month trial subscription with 100% money-back guarantee… learn more here.
Doug Hornig
www.caseyresearch.com
Doug Hornig is a senior editor
for Casey Research, publishers of Doug Casey’s International Speculator… for
over 27 years providing investors with unbiased and carefully researched
recommendations for high-quality gold and other natural resource stocks with
the very real opportunity for a 100% or better gain within a 12-month
horizon. Hornig also writes the Daily Resource, a daily column that appears
on the KitcoCasey and CaseyResearch.com web sites.
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