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Frank Holmes
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Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., a boutique investment advisory firm based in San Antonio that manages domestic and offshore funds specializing in the natural resources and emerging markets sectors. The company’s no-load mutual funds include the... More
My company:
U.S. Global Investors
My blog:
Frank Talk: Insights for Investors
My book:
Goldwatcher: Demystifying Gold Investing
  • This Chart Answers A Classic Question About Gold 1 comment
    Apr 30, 2013 12:57 PM

    Since gold's bull run began a decade ago, many people have asked me whether the metal was in a bubble, despite the fact that there were many drivers in place for gold.

    Here's another comparison that answers this classic question.

    Research firm Commerzbank's strategists recently compared the price of gold starting in 2002 to the price of Brent crude oil starting in 1998 and the NASDAQ Composite from 1990. Immediately following each index's record highs, oil and tech stocks declined sharply. Within nine months, tech stocks had halved in price, while it took only three months for oil to lose half its price, says Commerzbank. You can see the dramatic rise and fall of each index on the chart below.

    In contrast to oil and tech, gold has been level-headed over the past decade. Nearly 20 months after its peak, gold has fallen only about 25 percent, and its path remains in line with Brent and the NASDAQ after their bubbles burst.

    (click to enlarge)
    In Commerzbank's opinion, a comparison between the current situation in gold and the former bubbles is superfluous at best.

    Download a copy of What's Driving Gold now.

    The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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  • wantingtoretire
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    History has nothing to guide the future. The future is totally uncharted territory
    30 Apr 2013, 08:08 PM Reply Like
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