Gold bugs are fretting. Although gold (GLD) has been up for 11 consecutive years, 2012 has been a bumpy ride.
Since the beginning of the year, gold has recorded a gain of around 6.11%, which is less than the S&P 500’s (SPY) surge of 12.20%. Likewise, the beloved yellow metal is even underperforming broader precious-metals exchange-traded products, which include sliver (SIVR), and platinum (PPLT).
From a technical angle, gold now trades below both its 50 and 200 simple day moving average, which in Star Trek talk basically means to abandon ship. Is the bull market in gold over?
“Lost Decade” and Beyond
The 2000-10 performance for the S&P 500 has been called the “lost decade.” because buy-and-hold investors of this particular stock index fared worse than bonds (AGG) along with other major asset classes like gold (IAU).
Investors that owned dividend-focused stock ETFs, like the iShares Dow Jones U.S. Select Dividend Index Fund (DVY) or emerging market stocks (VWO) did much better than S&P 500 investors. Going back to 2000, a dividend stock strategy experienced average gains of almost 8%.
Gold bullion began the year 2000 at $318.70 per ounce and closed 348% higher at $1,421.40 per ounce at the end of 2010. However amazing that gold’s bullish run has been, it still doesn’t solve one of gold’s biggest shortcomings; it produces no income.
What Gold Doesn’t Do