We all know gold right now is hotter than a mustard seed on Mars. In 2011 alone, gold prices have rocketed 30% to all-time highs. And, everyone from housewives to hedge funds is racing to board the gold investment bandwagon.
Now, add one more item: Property owners asking their tenants whether they'd like to settle their rent bill via one of the following methods of payment:
· Cash
· Check
· Finely cut brick of gold bullion
Check it out: On Friday, September 16, the financial blogosphere revealed that the famous real estate mogul Donald Trump just accepted a $176,000 gold bar security deposit for space at his 40 Wall Street office tower.
Publicity stunt? Maybe; the Donald has had his fair share -- just think back to Trump's 2012 presidential campaign. But whatever his motivations are, the fact remains: In this time of economic weakness, Trump is looking for security. And, according to the mainstream majority, gold is the ultimate source of said security. Says one September 16 news source on the matter:
"Gold is great portfolio insurance. When the Dow has tanked, the metal has shone." (MarketWatch)
Want to know what we think? Elliott Wave International has been tirelessly committed to exposing the fallacy in the widespread notion that gold will always provide shelter from economic storms. Now, more than ever before, this truth needs to be heard, and seen.
Below are some of the most riveting charts and insights from past EWI publications that do just that:
March 14, 2008 Elliott Wave Theorist, EWI President Bob Prechter presents the following table showing gold's performance during the 11 officially recognized recessions beginning in 1945.
Prechter also plotted the DJIA into the same period and made this startling discovery:
The average total return for the Dow during recessions since 1945 is 6.89%. Taking into account modern transaction costs, the Dow actually beats gold with a 6.87% return.
The most powerful myth-debunking punch of all, though, came via Prechter's second chart of gold's performance -- this time during periods of financial growth.
In Prechter's own words:
"All huge gains in gold have come while the economy was expanding… The idea that gold reliably rises during recessions and depressions is wrong. In fact, like most such passionately accepted lore, it's backwards."
Then, EWI's July 21, 2008 Short Term Update blasted the notion that equities and stocks always move in opposite directions via this riveting chart of the S&P 500 vs. gold since 1999:
So, is gold the ultimate portfolio insurance? It can be -- if you know what the trend in gold is. Our publications give you answers on multiple timeframes right now.
Get the complete, objective picture of gold's trends today via a risk-free Financial Forecast Service subscription.
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