With the buds of spring have come tentative signs of economic optimism in the U.S., the latest of which were decent(-ish) non-farm payroll numbers last Friday. Inevitably, along with these signs of optimism, we yet again begin to hear the bond vigilantes raises their voices and argue the multi-decade bull market in yields is coming to a close.

In February of this year when 10-year Treasuries rose above 2%, I set out the historical context for this bull market using some quantitative analysis. My analysis showed and argued that even in a 30-year bull market of lower and lower yields, retracement of yields has been a standard feature. In fact, throughout the over 30 years since the Treasury bull market began, in a surprisingly large 45% of months, yields have actually gone up.

The increase in yields seen in January was in line with normal corrections seen throughout the

For those readers who have become accustomed to my few contributions to SA, you will be aware that I like to look through short term trends and identify the bigger picture. This is partly because short term trends are so difficult to identify at the time. And secondly, because (unsuccessful) investors tend to react instinctively to short term price action, whilst ignoring longer term trends. This is often understandable from a behavioral psychology point of view, often encouraged by dramatic headlines, but will lead to the retail investors selling low and buying high.

So, with gold tumbling 5% or more over Friday and another 7% or so today (Monday 15th April) at the time of writing, this is a classic moment to stand back and look briefly at some longer term trends, whilst ignoring Friday's headlines ("prices dive" , "gold plunges") which will have denied skittish investors the pleasure of

Whether to follow an active or a passive investment approach is an argument that has been raging for a number of years. It is an argument that has increased in its intensity with the availability of thousands of retail ETFs offering easy and cheap access to passive investment styles.

The following article contains a summary of an important report released each year by S&P Dow Jones that is essential reading for anyone interested in the active versus passive debate.

But before we get to the report, a few words of introduction. The debate between passive and active management stirs strong emotions on both sides of the spectrum. When tempers get too heated I think it is always worth remembering the wonderfully sage words of the Nobel prize winner William F Sharpe when talking about the reasons to consider a passive investment approach:

In the long run, this boring approach [passive

Gold investors, here are some good reasons you should also be holding Silver, Platinum and Palladium

I've never properly understood why people hold Gold (GLD) in an investment portfolio - and for full disclosure, that also includes me. That should prompt a few strong comments judging by other views around the SA site. But let me explain. As a (supposedly) rational individual with an investment and economics background, I'd like to think that I weigh up the fundamental value of different asset classes and on the basis of current price versus long-term fundamental value, make a decision whether to buy or not.

The problem with Gold is that it has no fundamental value. There are no cash flows, no coupons, no earnings, no principal value. It has almost no use for anything industrial, chemical, mechanical, etc. What is has going for it is that it is pretty to look at

Was that the sound of a bond bubble bursting?

Understandably, given the amount of market chatter and headlines claiming that government bond yields are in a bubble, last month's 24 basis point sell off in 10-year US Treasuries triggered a few jangly nerves. And if watching the screens wasn't making you nervous, well then the following comments probably had you wondering if yields had turned a corner.

Bill Gross, of Pimco fame, said that faster inflation

"will create an upper drift in long-term yields".

Billionaire investor Jim Rogers chimed in saying that

"I'm short long-term government bonds … I plan to short more. That bull market, that's a bubble."

Putting aside the fact that Gross famously shorted US Treasuries about 2 years and 150 basis points ago, as well as the fact that Rogers has been predicting the end of the 'bubble' for a similar time period, if you're holding

So, how's that economic recovery thing doing?

- U.S. GDP growth in perspective

In light of Wednesday's (unexpected) GDP report, here's a question to start things with. When did this latest (U.S.) recession end? Don't read on - have a guess first! According to the NBER, the respected authorities on these matters, it ended in June 2009. That's a whopping three and a half years ago. Doesn't feel like it with unemployment at almost 7%, 10-year yields around 2.00% and with QE3 now well under way - and now with negative growth in the last quarter. Ask your friends or your family - I'm guessing a lot of them won't think we are more than three years out of a recession. That's about half way through a normal economic cycle.

It's worth having a look at what's different about this recession from previous U.S. recessions, just

Up until the middle of last year, I thought it was fairly clear which way the euro was heading against the dollar. After almost three years of lurching from crisis to crisis, breakup of the eurozone was a frequent topic of dinner time conversation (my 8-year old reluctantly included). It was fairly clear that to short the euro was a pretty safe bet, even if it was the consensus view at the time.

But then came along Draghi at the end of July 2012 to say he would do "whatever it takes ... and believe me, it will be enough." Not quite Hollywood, but that's a pretty good script for a central banker. And, as you can see from the graph below, the market believed him. The saying "don't bet against the Fed" was unceremoniously dumped from its number one place in the trading rule book

What?!! You didn't get a 63% return on your investments last year?! (With thoughts from King Solomon and Warren Buffett)

Just before we close the door shut on 2012, I thought it would be informative to make a quick review of the returns we saw over the last year in the major asset classes and see how holders of a typical portfolio may have fared. (We'll get to the 63% shortly.)

For the purpose of this exercise I've taken the following eight asset classes as representative of the typical asset classes a mainstream dollar-orientated investor may have included in a portfolio. The table also shows the overall return for each of the asset classes for the year with the corresponding volatility.