Gold price outperforms YTD 2014

What a week!  Listening to today’s Weekly Wrap radio will give you a full account of the economic turmoil unfolding around the world.  Overnight Euro shares plummeted as were US shares before one of the Fed presidents suggested they might just continue with QE afterall (QE Infinity?)…. $5.5 trillion has been wiped from global stockmarkets in this rout.  For perspective, that’s about the size of the entire gold and silver markets!  We talk about the “cyclone in a shoe box” where the gold and silver markets are relatively tiny in the scheme of global investments, accounting for only about 1% at the moment (an historically low amount).  So just imagine what happens to the price when there is a rush of the 99% looking to get into that 1% safe haven as they realise bonds are reaching danger territory too.  So lets look at how things have performed YTD:

Australian All Ords: -2.3%

US Dow Jones: -2.0%

US S&P500: +1.6%  (note it is these companies favoured by the QE money) 

Silver (AUD) -8.9%

Gold (AUD) +4.7%

So whilst we talk of this current bearish market in gold it is still outperforming shares.  Silver is the one to watch as it shares the same economic drivers as gold but also has its industrial uses and yet has way underperformed gold this year (hence the now 71.2 gold:silver ratio!).