Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market and Gold Wrap Up for 2006 and prospects for 2007

Commodities / Forecasts & Technical Analysis Jan 18, 2007 - 01:04 PM GMT

By: Aden_Forecast

Commodities

Most of the markets moved higher in 2006, driven by lots of liquidity. Stocks, commodities, precious metals and currencies... they all rose. Let's now see how they ended the year...

LARGE CAPS: THE BEST SECTOR
As the year drew to a close, the Dow Industrials hit new record highs and the S&P500 ended up gaining 11.78% in 2006. The Dow Transportations rose 8.59% while the Utilities gained 10.44%. The least impressive index was Nasdaq, which was up 7.65%, but the big stock winner was the Dow Industrials. It rose an impressive 14.90%.

Some of the foreign emerging markets did much better than the U.S. and other major international stock markets. Among the best were Mexico, Hong Kong and Singapore, which gained on average 34.5%.


In comparison, U.S. bonds were down slightly in 2006. So stocks were a better investment, strongly outperforming bonds. But what about the currencies and precious metals?

If we take the euro and British pound as examples, which were among the stronger currencies, they gained 9.86% and 12.22%, respectively, averaging 11.04%. Interestingly, this nearly matched the gains in the S&P500, making the stock and currency markets close competitors in 2006.

BUT PRECIOUS METALS WERE THE WINNERS
The precious metals were another story as they strongly outperformed nearly all of the other markets, like they've done over the past six years. Gold rose 19.69% while silver soared 41.06%. Taking the average of these two metals, annual gains amounted to 30.38%, which was slightly more than double the gains in the strongest U.S. stock index, the Dow Industrials at 14.90%.

The HUI gold share index, however, only rose 13.27%, which was in line with the general U.S. stock market. Still, if we average gold, silver and the gold shares, gains were 24.67% and that was 66% better than the Dow.

The point is, even though the stock market had its best year in several years, the gains in precious metals investments continued to be far better. We believe this will continue in 2007 and for years to come.

Looking at Chart 1 , it tells the story. Here you'll see gold compared to bonds and stocks going back to 1970, along with a very long-term 80 month moving average.

Mega Trend Favors gold over stocks

Since this moving average is so long-term, it identifies the mega trends and it doesn't change often. But when it does, the new trend tends to last for a decade or more. Note, for example, that the ratios rose strongly in the 1970s, meaning gold was much stronger than stocks or bonds. In other words, the percentage gains were greater in gold throughout that decade.

That wasn't true in the 1980s and 1990s. In both cases, the ratios declined steeply. This meant gold was weaker than stocks and bonds. Stocks and bonds were the better investments, providing superior gains compared to gold.

Most interesting, these mega trends changed in the early 2000s. They're on the rise again, indicating the gains in gold are better than stocks or bonds. So as we've seen in recent years, gold is the better investment and that'll likely continue in the upcoming years.

We wouldn't shrug off this chart's importance. In our opinion, this is one of the most interesting charts we have because it's pointing the way. It's not only telling us what lies ahead but also the best way to maximize your investment gains during that time. It truly provides a peek into the future.

A MATURING BULL MARKET?
For now, many worry about the possibility that the gold price is in a maturing bull market. It has already produced gains each year for the past six years and considering the super rises in silver, the base metals, energy, raw materials and some soft commodities, you can understand why.

Granted, there is some excess in the market that will likely be worked off in 2007. But that doesn't take away from the mega uptrend that started in commodities in recent years, which still has years to run.

MEGA RISE UNDERWAY
We've shown the 200 year commodity cycle on Chart 2 before, but it's worth repeating. Note that commodities have had five mega upmoves in the last 200 years and the sixth one is now underway. On a big picture basis, you can see that the current commodity rise is still young compared to previous upmoves and the upside potential is wide open. Each commodity upmove has also coincided with a war, as is the case today.

2006 year commodity cycle is up gold

The current rise, however, is more powerful due to the massive demand for commodities coming from China, India and the emerging countries, compared to the limited supply. This will surely continue to keep upward pressure on commodities in the years ahead.

gold in swiss francs

 

BullionVault.com is a revolutionary online market for private investors to buy gold,

BullionVault.com is currently giving a FREE gram of Swiss vaulted gold bullion to everyone who registers (worth $24)- to try the service and learn how to trade. Sign-up is easy, fast and credits you immediately.

 

Plus, the global financial landscape has changed. Competitive devaluations are the way today as countries compete to sell their goods at the best price. Globalization is in full swing and global imbalances are happening, which is why gold, the ultimate currency, has risen sharply in all currencies over the past year (see Chart 3 as an example). Gold tends to rise when the U.S. dollar falls. But when gold rises in all currencies, you know the bull market is real and solid.

by Mary Anne and Pamela Aden

Mary Anne & Pamela Aden are well known analysts and editors of The Aden Forecast, a market newsletter providing specific forecasts and recommendations on gold, stocks, interest rates and the other major markets. For more information, go to www.adenforecast.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in