Monday, March 15, 2010

Visual Relative Strength Anaysis has a nice tool called Performance Charts that enables you to quickly perform a visual relative strength analysis. Let's see how the various other asset classes are doing relative to GOLD.

As you can see, over the past year, GOLD has underperformed stocks, commodities, silver, and the precious metal miners. It has performed better than the USD and bonds. The strongest asset class over this period has been stocks. Why did I pick GOLD as the baseline? Because GOLD has been the best performing asset class over the past 10 years:

Here's another example of stepping back and looking at the bigger picture, i.e., the dominant long term trend of a secular bull market. You definitely want to be on the right side of the trend. In other words, go with the dominant trend until the trend is broken. Let the river carry you - don't try to resist. It still looks like to me that the dominant trend is still accelerating. GOLD is currently taking a little rest, but is still way in the lead. If you watched the speed skaters or cross country skiers during the Olympics, then you know that GOLD is just cruising right now - getting ready to explode when the time is right to finish the race.

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