truthingold.com / By truthing / April 23, 2013, 07:55
In August 2011, a Gallup poll asked Americans what they thought would be the best long-term investment: 34 per cent said gold, 17 per cent said shares.
It’s too early to declare a winner, but the early results are in. The exchange traded fund that tracks gold – the SPDR Gold ETF – is down 17 per cent since the survey was taken. The S&P 500 is up 38 per cent.
Gold has lost nearly one-fifth of its value this year alone, including more than 10 per cent in less than a week, last week – the worst decline since the early 1980s, when the yellow metal began a two-decade slump. Whether the current slide is the end of gold’s bull run, or just a short-term drop, no one knows. What is clear is that gold isn’t the wealth-preserver many thought it was. Some gold stocks, like Silver Lake Resources (ASX: SLR) and Kingsgate Consolidated (ASX: KCN), have lost more than half their value in the last year.
The irony is that the goldbugs may get the story right but the investment wrong. Like any asset, gold is forward-looking and prone to wild overreactions. So prices doesn’t always mesh with what’s going on in the economy.