Gold goes up a fraction and everyone loses their friggen mind. My LinkedIn feed is alight with gold bugs who have gone all a quiver in their nether regions because gold has had a modest move up. Now I will agree that Linkedin has become like Facebook but for people with either a real job or a made up title. But the idiocy around gold extends far beyond the reach of social media with all sorts of claims as to how much gold a portfolio should have to once again we are facing financial armageddon so you should sell your house and buy gold. However, before I continue I need to offer the disclaimer that one of my most successful trades for the year has come courtesy of gold but this trade was data driven not the result of an article of blind faith.
So once again its time to go to the data to see what the reality is. The chart below looks at the value fo $1.00 invested in other precious metals and two benchmark indices for comparison at the beginning of the year.
As you can see gold is not the runaway performer that the gold bugs would have you believe courtesy of their overblown narrative. However, the situation is worse when you compare gold to a wider variety of commodities and indices as can be seen below.
You would have been better off investing in cheese or poultry at the beginning of the year rather than gold.
Superficial knowledge that is applied with confidence is a problematic feature of financial markets since it speaks not off careful analysis but rather being captive to a narrative fallacy. Worse than this an opinion in the absence of data is little more than a religious belief. Neither of which are grounds for investing successfully.