Tbills and Gold
Surprise and Disaster
TBILLS SYSTEM vs 3 Indexes, DJIA, NDX, and SP500
37.7 years August 30,1971-May 11, 2009
Cumulative % Change--Hypothetical--Weekly
See Comments below
THE GOLD SURPRISE
Gold beats everything. Up six times more than the stock market, ten times greater than inflation, better than our Tbills system.
From time immemorial, gold has been the possession of choice to offset inflation and protect values in time of major economic crises or war.
That seems rational, but it is not. Gold earns no interest. It is cumbersome. It costs money to store and insure. It requires personal weapons to carry and defend. And yet, looking above, it's seems to work exceeding well--the aqua tick on the chart. 5,530% at the end of the day vs a piddly 523% in CPI inflation over 37 years.
And yet, and yet, who do you know who will buy and hold gold for decades including yourself or me? Look what happens to those who do.
THE GOLD DISAPPOINTMENT
-67% drawdown. 29 years to break even.
This is a profile I want nothing to do with as a permanent 'inflation hedge'. It may, however, be attractive as a permanent trading vehicle, based on its ranking sequences in the Worldwide ETFs Portfolio. I will look into that one day in the future.
In the meantime, the next page summarizes what we have learned about the three major indexes(including NDX) plus Tbills as an all-weather approach to inflation hedging and disaster avoidance.
This is page 3.
Previous Foolproof Failsafe articles
here,
here,
here, and
here.
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