Gold Beats the S&P by a Mile!

As a gold bug, I can’t deny being biased toward owning the yellow metal. But out of curiosity, I decided to see how well US$1,000 allocated to gold on January 1, 2000 has performed up until May 17, 2024 compared to allocating that same amount on January 1, 2000 to the S&P 500. I was quite surprised. Gold performed much better than I anticipated.

During the years since 2000, the S&P 500 had 8 losing years with an average loss of 13.46%. Gold lost value against the dollar in 7 years but the average loss was just 7.31%. Wining years for the S&P averaged 16.78% and 16.45% for gold. So in measuring risk in terms of volatility, the S&P as a whole was more risky than gold.

I will quickly admit that the outcome for the S&P 500 would be somewhat higher had I compounded quarterly dividends when they were paid rather than compounding yearly dividend sums only annually. If someone wants to take the time do that, I would welcome learning of the difference. But it’s inconceivable that the outcome would bring it anywhere near the 468% gain for gold.

Of course, this is just one more reminder that and once of gold is an ounce of gold. A dollar is not a dollar from year to year. Its purchasing power is always declining whereas gold’s purchasing power is as stable as any item ever used as money. In fact, as J.P. Morgan is noted for saying, “Only gold is money. Everything else is credit.”

So far in this new bull market, junior gold shares have just now started to outperform gold as the following chart of GDX vs. gold bullion from Momentum Structural Analysis reveals.

And another chart from Michael showing a breakout on both price and momentum for the biggest gold miner of all, Newmont Corp. has begun a breakout.

I truly believe we are at just the start of a gold bull market of my life time that is likely to rival or even surpass that of the 1970s that saw gold rise from $35 to $850.

At the same time there are a host of evolving world class gold and silver discoveries covered in my newsletter which the market have largely gone unnoticed thus far. I hope you will consider subscribing.

Best wishes,

Jay Taylor

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