If we are going to talk about a "bear market" in gold, we ought to note that only a few years before the $875 peak, gold was at about $40 an ounce. The word "market" hardly even applies legitimately here; "mania"--a one-time, frantic excess in one commodity or security, which is such a disaster that it never repeats itself--is more accurate. "Market" suggests an ongoing, though fluctuating, process.
In terms of purchasing power of about 1970, gold is still about 75% ahead of inflation. That is somewhat better than U. S. savings bonds, which would have only barely have kept pace with inflation by tax-free compounding over that period. But it's very poor compared with stocks.
The Internet/Techstock mania is perhaps in some ways comparable to the gold/silver mania. After it washes out, anything labeled ".com" will probably be a joke for a century to come. At least with gold, you still have something with a face stamped on it when it's all over, unless you bought futures (calls, in the case of mania stocks at their peak). |
