Gold Beats All in Decade of 'Fear and Greed'
Source: Bloomberg, John Glover (12/22/09)
"Investors who bought gold or commodities at the beginning of the decade should have tripled their money. . ."
The CHART OF THE DAY shows returns on six asset classes, including reinvested interest or dividends where applicable. A $100 investment in gold would now be more than $380 while the same sum in commodities would have grown to about $357, according to the Standard & Poor's GSCI Enhanced Total Return Index. Stock investors lost $10 in the decade.
Gold's nine-year bull market was recently given extra impetus by concern that $12 trillion of government spending to rein in the worst global recession since the 1930s will trigger inflation. China's thirst for the raw materials needed to fuel its export machine helped push up the price of commodities from copper and lead to plastics and coal.
"That's fear and greed at the same time," said Toby Nangle, director of asset allocation at Baring Investment Services Ltd. in London. "The fear of inflation is in the gold price. Commodities and oil show emerging markets emerging, and the rest is the developed markets submerging."
Holders of U.S. high-grade corporate bonds made a profit of about $90 on their investment, as did Treasury investors, according to Bank of America Merrill Lynch index data. Buyers of crude oil saw their $100 turn into $268 after it rose to more than $500 in 2008, based on the futures contract for West Texas Intermediate.
Stocks lost about 10%, including reinvested dividends, according to the S&P 500 Total Return Index.