Where Is the Value? Gold Seems to Be the Answer

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Gold has outperformed the S+P by 30% since the commodities peak, and its relative performance with respect to both oil and silver is also telling. In the case of silver, this is partly because silver is naturally more volatile than gold and we are considering a bear phase, so silver should have been the under-performer.

With all the mayhem and volatility of recent weeks it is worth standing back a little and gaining a sense of perspective. This will, piece therefore be redolent with numbers in a brief examination relative performances in order to see what can be gleaned in terms of the prospects as, the markets possibly return to something approximating to normality - although this of course, may yet take some time...

Followers of the precious metals markets will not be remotely surprised to see platinum and palladium topping this list, and the sharp declines on the energy markets are also clear to see. Gold is the best performing metal, while the internationally-weighted dollar is surpassed only by the dollar:euro rate, as the markets have demonstrated their clear aversion to risk...

Gold has outperformed the S+P by 30% since the commodities peak, and its relative performance with respect to both oil and silver is also telling. In the case of silver, this is partly because silver is naturally more volatile than gold and we are considering a bear phase, so silver should have been the under-performer. Equally, though, silver is essentially an industrial metal and it has been suffering from concerns about the economic outlook and the gold:silver ratio has been as wide as 80 in mid-October, the highest since June 2003. Fundamentals suggest that this could yet widen further.

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