10 Gold Charts Commercial Investment Firms Never Want Clients to See
Here are 10 gold charts that every global commercial investment firm is terrified to show their clients. When priced in ounces of gold, major western stock market indexes have performed horribly over the last 8 ½ years. Since, 2002, the US S&P 500 has lost a whopping 78% of its value. The Australia ASX All Ordinaries Composite (similar to the US S&P 500 index) and the UK FTSE indexes have not fared much better, respectively declining 70% and 77% in value. So despite all the hoopla about record runs in global stock market indexes in 2009, the great bubble machines operated by Central Banks have guaranteed that it may take another 20 or 30 additional years before investors break even in nearly every developed stock market index and even some emerging stock market indexes when the returns of these indexes are measured in gold.
What about emerging markets? Goldman Sachs is fond of reminding us that they coined the term “BRIC” for the emerging markets of Brazil, Russia, India and China in November 30, 2001. Despite all the hype about China’s enormous growth in recent years and the fantastic performance of these markets in the last decade, when priced in gold, the Shanghai Stock Exchange has lost 63% in value since the start of 2002. The Brazilian Bovespa Index? It eeked out a 2% gain over this same time period And the Bombay Stock Exchange? It was up a respectable 20% over an 8 ½ – year period.
Thus, gold’s performance slaughtered the performance of the developed global market indexes and that of China, just about broke even with Brazil, and only lost to India. If we look at gold’s performance denominated in the world’s two leading currencies during this same 8 ½-year investment period, gold soared by 207% denominated in Euros and an even more spectacular 324% denominated in US dollars. Even when priced in live cattle and lean hogs, the value of gold increased enough to buy 1.85 times as many cattle and hogs in a span of just 4 ½ – years.
Even though gold is going through a corrective phase right now, remember that in the article I wrote last week titled, “The Safest Bet During Uncertain Markets”, I warned readers: “As long as Central Banks and their governments scheme against PMs, gold and silver will continue to have sharp, scary drops in the future at times.” Still, the long-term future for gold is still solidly higher. If you look at the above performance of gold against alternative investments, it is easy to realize that all the managers and financial consultants that are jumping on gold’s bandwagon now are enormously late in acting in their clients’ best interests (though still early as far as the end game is concerned). Their arguments that gold is only now, a “safe” and “rational” investment, only further expose their lack of understanding about the mechanisms of our global monetary system – a scary reality when they are serving as advisers to many clients.
Granted, I wasn’t as early to the party as others with greater vision. But when my research led me to the conclusion that a monetary crisis was inevitable in late 2005/ early 2006, I started advocating gold at about $530 an ounce and silver at $9 an ounce. And what about silver’s performance from 2002 until present day? A mere 290% return (denominated in US dollars) as illustrated by the 10th and final chart (admittedly a silver and not a gold chart, I know).
Again, you may visit the link in the article “The Safest Bet During Uncertain Times” to understand why gold and silver have never been a favored asset of large commercial investment firms. Even with the reality of the deeper stages of the monetary crisis descending upon us, many commercial investment firms are still directing their clients into fiat gold and fiat silver in the form of the GLD and SLV ETFs. In the process of doing so, they are sadly ensuring that their clients will never join the party.
About the author: JS Kim is the Chief Investment Strategist and Managing Director of SmartKnowledgeU, LLC, a fiercely independent wealth consultancy company that guides investors in the best ways to invest in gold and silver through the progression of this global financial crisis. Since its inception in June, 2007, until August 26, 2010 his Crisis Investment Opportunities newsletter has returned a cumulative profit of 120.62% (*in a tax-deferred account). JS also maintains an investment blog, the Underground Investor, in which he presents financial knowledge rarely covered by the mainstream media.
The above article may be reprinted on other sites provided all text and links are kept intact, including the above author acknowledgment.
Posted: Friday, May 21st, 2010 @ 8:09 am
Categories: Gold Investments.
Tags: best ways to invest in gold and silver, gold, silver.
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May 21st, 2010 at 3:14 pm
pretty interesting charts,old message
May 21st, 2010 at 3:42 pm
Your charts, such as $FTSE:$GOLD, are comparing indexes measured in 2 different currencies. That chart shows (stocks priced in GBP) divided by (gold priced in USD). Of the currencies you mention, AUD EUR and CNY performed significantly better than USD over 10 years but I doubt it’s enough to change the lesson.
Long-term Dow/Gold chart:
http://home.earthlink.net/~intelligentbear/com-dow-au.htm
You might want to consider house prices too. Here’s a UK chart:
http://gold.approximity.com/since1930/UK_House_Prices_in_Gold.html
May 21st, 2010 at 7:51 pm
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May 21st, 2010 at 8:01 pm
[...] 10 Gold Charts Commercial Investment Firms Never Want Clients to See [...]
May 22nd, 2010 at 6:59 am
Fantastic article! I wish more people knew this.
May 22nd, 2010 at 2:05 pm
Jimbo, you are definitely right. To be technically correct for a Brit that invested in the FTSE then I should have plotted the FTSE in terms of gold in pound sterlings. Thinking too much like an American I suppose! The comparisons make more sense for an American that invested in the FTSE or the ASX, or the Bovespa or Shanghai Stock Exchange but that would have invested in gold in US dollars. And I’ve done comparisons with housing markets in various countries priced in gold in the past so that’s a fantastic idea as well. Thx for the comments. Cheers.
-JS
May 22nd, 2010 at 9:42 pm
The good research in my opinion the once of gold will reach minimum2000 usd
May 22nd, 2010 at 9:59 pm
[...] piece… and is a must read. It's posted over at theundergroundinvestor.com… and the link is here. The next gold-related story is also very much worth your time. It's a piece from today's edition [...]
May 23rd, 2010 at 9:38 pm
Take whatever what is expensive and compare it with the rest. You will always write something like this. It works for every ovepriced index. You can make the same article two years ago about houses in USA.
May 25th, 2010 at 6:31 am
Take whatever what is expensive and compare it with the rest. You will always write something like this. It works for every ovepriced index. You can make the same article two years ago about houses in USA.
……………………………………………………………
@flory
Stock Reports
May 26th, 2010 at 12:41 am
Would also be helpful to see all the stock market indexes priced in a basket of goods. The charts above would radically change if the gold price falls (though I don’t think it would). Baskets of goods also may resonate with the average person more. People may were gold, but they don’t eat it or use it to warm there homes. A basket of wheat, oil, cotton, fruit futures, etc might hit home.
The charts would still decline. They would show the market value buys less and less of products people use every day or items that are used to make the products people use every day.
May 26th, 2010 at 9:45 am
Non sense !
Displaying a chart of the ratio FTSE/GOLD is just like making a ratio with apple and beans. … you get nothing usable !
If you want to compare FTSE or SSEC or BVSP indices with Gold you should first put these indices, that are in national money (here British, Pound, Yuan and Brazilian real) , in US dollar as Gold is presented.
May 26th, 2010 at 9:05 pm
Dear JS and smartknowledgeu team: Thank you so much for all your work!
And to let everybody know: Physical precious metals were SOLD OUT in Germany after the 750 billion European bailout decision. There was almost NOTHING left to buy. The online shops of major precious metal dealers broke down because of a) traffic overload and b) empty inventories. People were waiting in line in front of the shops to convert their fiat currency into something with intrinsic value. So everybody switch off their tube now and wake up.
Just take a look at one of the biggest German PM dealers with shops in Berlin, Munich, and Bad Homburg near Frankfurt:
http://www.proaurum.de
Check out their inventories. The term “nicht verf.” means “nicht verfügbar” in German. This means “not available” in plain English. At the same time spot prices are going down: Option expiry coming soon… Demand is going up and inventories are sold out. At the same time spot prices are going down. What else do you need to finally see the fraud?
Kind regards from Berlin, Germany. And good luck to everybody!
May 27th, 2010 at 2:06 am
@Stefanie, thx for the update in Germany. I have heard reports that physical gold has been next to impossible to obtain inside Germany recently. Thank you for providing an update to the situation there. Best wishes.
@Yann, you are a week late. If you had read the comments you would have noticed that someone already addressed your concerns and that I had already responded. While the graphs are flawed for a Brit that owns pound sterlings only, they are NOT of zero utility as you state. The charts still aptly demonstrate the utility cost of an American, a Brit, a German, a Russian that would have invested in the FTSE with American dollars, the Bovespa or the Australian ordinaries vs. buying gold in US dollars. This situation is not an unusual situation globally as there are many non-Americans that hold a lot of dollars throughout the world that have invested in stock markets outside of their countries, delegating dollars to these investments, or could have chosen to buy gold in US dollars. For people in these situations the charts still illustrate the opportunity costs of making the wrong decision.
Now for a Brit that only holds British pounds and has a chose of buying the FTSE in pounds or gold in pounds, I have already stated that the chart would need to show gold priced in pounds.
May 31st, 2010 at 12:36 am
Short of bullion gold in Germany?..Open the eyes. Colombia has produced gold for 2500 years!…Take a glimpse at the Museo de Oro de Bogota…The true?..There are 7000 applications in line for environmental permission to dig out gold in Colombia. There are not enough buckets to rent to aluvial miners! Last year the colombina central bank sold Us1 billion in gold bullion to the FED!
June 1st, 2010 at 6:45 pm
Now I am worried. I have almost all of my IRA in ETFs for gold and silver, so in some sense these charts were an affirmation of a good position as our government continues trying to spend our way out of a recession. I know that some big banks have massive short positions against both gold and silver, but now I think I see, because of two charts above, why. Gold is up 324% since 2002, and silver is up 290%. But how much is the dollar down — especially with the weakened pound and euro? Even if I am still right and the banks wrong, I still have to trust that the two banks that are entrusted with the ETF gold and silver actually have it.
June 12th, 2010 at 6:39 am
Has anybody given any thought about the possibility that someone may have found a way to produce synthetic gold?
June 12th, 2010 at 10:37 pm
Great question L Lee! I have the same question. Do I take the 20% tax hit to pull my fiat money out of my IRAs and 401s and invest in the real thing? I have been pondering this for two years. J. S. Lee please respond.
June 23rd, 2010 at 6:06 am
Brooks, I have the same problem. I cannot stand my options in my 401K. I have done some research and stumbled across something called a “self directed IRA”. I am still looking into this for validity but it looks like a promising way to cash out a 401K (without the big tax hit) and invest the money how you like. Google it and read. Good luck investing.