A few weeks ago, we wrote that Gold was the Ron Paul of the Investment World.
Yesterday, we saw a variation on that theme with this interesting piece on an online publication called Wall Street Cheat Sheets about Dr. Paul’s investments: Presidential Candidate Dr. Ron Paul Loves Gold and Gold Miners
What we like most about the article is that it completely demolishes the snarky Barron’s article that brought the subject up. Here’s a quote from Peter Schiff, CEO at Euro Pacific and a gold bug:
The article calls Dr. Ron Paul’s investment strategy a “stopped clock” approach that has “finally paid off,” as if gold prices are just now starting to rise. Peter Schiff exclaimed, “It hasn’t finally paid off, it’s paid off every single year over the last 12 years, with the exception of one year, 2008. Who cares how badly they performed in 2008, where are they now? This article is being written in 2011, we now know the losses in 2008 have been completely eradicated by the rally, not the case for the regular stock market.
We checked that claim by comparing 10 years on the DJIA with Barrick (ABX). Wow! ABX way outperformed the DOW over that period. And companies are supposed to be slower, but less volatile, than the actual commodity. The metal closed at $1830/ounce on Friday – not too shabby.
This example also shows that it pays to do a number of comparisons – both long term and short term to see how a stock, or commodity!, you might be interested in compares to its fellows in the same industry as well as the broader market.
The only thing wrong with this piece is that the unnamed author doesn’t provide any links to referenced articles.
Disclosure: IFO is long ABX.