Gold's Relative Performance Since 2001 vs Major World Stock Markets

January 8, 2015

Unfortunately, very few investors in the world are cognizant of the relative performance of the gold price vis-à-vis the traditional world stock markets...as demonstrated by the chart below (2001 to 2014). It shows the percent gain or loss over 14 years:
 

Moreover, I am convinced future relative performance of the price of gold will be a mirror image of the past fourteen years. My steadfast conviction is based on the following:

- China and India are snapping up gold at these bargain basement prices

- China’s covert objective to replace the US$ reserve currency with its own gold backed Renminbi

- The Euro Union is on the verge of implosion, which will stampede their citizens to gold

- Accelerated Growth in the US Fed’s Balance Sheet

- Many country Central Banks are buying gold to diversify their foreign reserves

- US Dollar is on course to lose its global reserve currency status

- Russia’s Putin may spark World War III over the growing turmoil in the Ukraine

- Growing Global Gold Demand continues to outpace flat mining Supply. Therefore, prices must rise

- All the above will continue to pressure the US dollar lower, and conversely gold higher

- Everyday more new investors are putting their money in bullion

- Internet Communication to easily transmit gold’s message – instantly and worldwide

Hopefully, China's and Japan's Central Banks might someday see and comprehend the following chart, showing the relative performance of gold, US T-Bonds and the US Dollar...

If the Chairmen of Central Banks of China & Japan could see this chart, the price of gold would soar to over $2,500 in less than a week. WHY…you ask? Here’s why!

China and Japan are the world’s largest holders of US Treasury Bonds.  China has a hoard of $1.3 Trillion in T-Bonds (denominated in US Dollars). And Japan (sadly) holds $1.2 Trillion in US T-Bonds. Clearly, the above chart shows that the relative investment performance of gold vs US Treasuries since 2001:

  • Gold Price has soared +337% (recent correction notwithstanding), while
  • T-Bonds have risen a miserly +45%

But China’s and Japan’s opportunity loss does NOT stop here (i.e. The Asian nations have forsaken 292% by not having gold reserves instead of fiat US paper reserves).  One must remember that all US T-Bonds are denominated in US greenbacks…which have lost -17% across the past 14 years (the chart clearly indicates this).

One wonders how soon the Directors of The Peoples Bank China and the Bank of Japan will be forced to resign due to this disgraceful financial blunder.  

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Founder of Gold-Eagle in January 1997.  Vronsky has over 42 years’ experience in the international investment world, having cut his financial teeth in Wall Street as a financial analyst with White Weld. Vronsky speaks three languages with indifference: English, Spanish and Brazilian Portuguese.  His education includes a degree in Petroleum Engineering from the University of Oklahoma, a Liberal Arts degree from Hartnell College and a MBA in International Business Administration from UCLA – qualifying as Phi Beta Kappa and Tau Beta Pi for high scholastic achievements.  Vronsky believes gold and silver will soon be recognized as legal tender in all 50 US states…and many countries worldwide.  You may reach I. M Vronsky at: vronsky@gold-eagle.com and/or vronsky@bellsouth.net

Gold is the official state mineral of Alaska.

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