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12/26/14

Gold has not done badly in 2014 (no matter what you hear from the biz-moron-o-sphere)

Here's the gold and silver bullion ETFs, GLD and SLV, 2014 year to date:


This chart gets featured because I've already seen brain dead year-end commentaries, Barry Ritholtz included (who passed a link on over the Holiday season with evident glee), giving us the "oh wasn't it horrible for those silly old goldbugs this year oh ha ha oh silly people" type of thing. So let's be clear that the ~1.5% rise in bullion this morning, December 26th and hour before the NY open, has wiped away half of the year's losses in gold.

Repeat until understood: Gold has not done badly in 2014.

Now I'd agree that gold has not done well. Indeed the acid test is clear, it's failed to return a profit versus its benchmark currency. And once that's stated we can also play comparatives until we're blue in the face, the obvious one is the S&P500 and I'm good about stating that gold hasn't been an obvious winner, a star performer, a feelgood alpha factor in your sophisticated modern investment portfolio kind madam kind sir. But 1.5% down on a year isn't bad. It's not "throw in the towel" bad. It's not unjustified waste of port space and dollars bad. It's not even close to the shellacking it took in 2013. Especially when it wasn't in your port to provide alpha in the first place (hint: there's no alpha in gold, but don't let that factor spoil a good narrative, eh). So therefore with that nice and straight in the mind, here are a few true statements:
  • Silver has done badly in 2014 (see above)
  • Oil has done badly in 2014 (which of course includes the go-getter oil stocks, particularly those shale/bakken/alt hydrocarb things the same mainstream braindeaders wanted me to buy)
  • Junior explorecos running on fumes have done badly.
  • Gold did badly in 2013. Last year, not this year. I mentioned that again for a reason.

Also on a personal note and somewhat to my surprise, my personal portfolio has done much better (not just better) in 2014 than it did in the real waterfall death year of 2013. For sure I've picked my share of losers and lost money on them (there's plenty of red on line items in my port right now, as any subber will tell you) but they've tended to be the most speculative end of the deal and therefore carrying the smaller amounts of cash (one exception to that is the bath I took on FR.to this year) and the bigger bets, though fewer in number, have done better.

And we could continue. But don't be dumb and buy into the dumb narrative that's now doing the rounds; despite its hated status gold hasn't been a bad place to park some dollars and it's been a good place to park other types of currency you may have had lying round the house because it's only just been beaten by the star currency performer of the year, the greenback.