Here's a Few Facts and Charts That Gold Bugs Might Not Like

Should you be holding gold?

Gold Headed for Longest Losing Streak Since March

Goldbugs never change

Here are a few golden facts for your consideration:

a) Gold is down ~38% from a weekly June 11, 2011 peak.

b) Pretty much the chart shows lower-lows and lower-highs

c) The London Spot Gold series has delivered ~5.55% per year in the past two decades. The S&P 500, ~9.00%.

d) Gold bugs are still adamant... higher.

Gold is always fascinating, but is it a place for your capital this 2015? Is it a place to play, to "invest", or as a long-term "store of value"?

I will avoid the call but I'd suggest looking two charts:

Here is Spot Gold, pre-Depression. One challenge for "total return" is the quiet of 1983-2000.
Here is Spot Gold, pre-Depression. One challenge for "total return" is the quiet of 1983-2000.

 

Here is the same chart but inflation-adjusted. That "quiet" becomes painful given inflation. The blue circle is where many gold guests suggests "fair value" is...gold bugs disagree.
Here is the same chart but inflation-adjusted. That "quiet" becomes painful given inflation. The blue circle is where many gold guests suggests "fair value" is...gold bugs disagree.

James Steel is very good over at HSBC. He writes: "Bullion looks locked in range bound trading. Gold is absorbing a number of conflicting and offsetting factors, low inflation and weaker oil and a stronger USD, against a possible further delay in a Fed rate hike and better Asian demand, as well as the possibility of surprise developments from the Greek debt talks." His notes consistently describe what people are doing; not, hoping. As well, he folds in the emotion of demand. Perhaps at the end of the day that is what the price theory of gold is about: emotion.

Discuss.

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