By Chris Weber, editor, The Weber Global Opportunities Report Wednesday, January 5, 2011
Ten consecutive years.
Three words. As rare as they are few. Gold has risen in price for 10 consecutive years. Not one year since this century began has gold not gone up in value.
Compare this to any other bull market and you won’t see its equal. Take the huge Nasdaq bull of the 1990s. Or, really, the 1980s and ’90s.
The Nasdaq closed at 151 the last day of 1979. It soared to close 1999 at 4,069. That’s 2,595%. But during those two tremendous decades, there were down years: 1981, 1984, 1987, 1990, 1994. That was the last down year, until 2000, when it all fell apart. But during that huge time, the most consecutive years of profits the Nasdaq average could muster was just five (1995 thru 1999). But long before the end of 1999, the bubble was apparent. Everyone and his pet seemed to be talking about how much money they had made in the Nasdaq.
Mid-1982 to October 2007 saw a quarter-century of gains in the Dow Jones Industrial Average unlike any other. From 780 to 14,165, bottom to top, is a rise of 1,716%. So transformative was this move that people still think in terms of it: that stocks are the only thing you should really be in, that they cannot lose. That’s what a 25-year bull market will do.
But during that magical quarter century, the most consecutive years of rises in the Dow amounted to nine: all the years from 1991 through 1999.
Until what happened recently, that was the greatest record I could find. And I’ve tried. I’ve gone back to 1800, to the one stock exchange that would be the most powerful over the next two centuries: the London Stock Exchange. It has managed to string together only eight consecutive years of gains.
Now, there may be a rather obscure market that broke the Dow Jones’ nine-year record during the 1990s. But I haven’t found it.
That is, not until the end of 2010. This past year marks 10 years of consecutive rises for gold.
From a low of $255 to a high of $1,421, that is a rise of 457%. Not the huge thousands of percent we saw in the Dow and Nasdaqâ€¦ not yet. But for sheer consistency, I have never seen another market do what gold has just doneâ€¦
Year Gold’s Rise 2001 1.97% 2002 24.80% 2003 19.50% 2004 5.35% 2005 18.36% 2006 22.95% 2007 31.35% 2008 5.14% 2009 24.30% 2010 29.80%
Just writing out those years brings back memories of where I was, and how I spent those years and what the world was like. In 2001, when I first bought gold, it was something that you kept very much to yourself. You thought, yet you said nothing. It was easier that way.
Today, I still say very little, but what I say is very different. Instead of doing the stupid thing and telling a few people to buy, this past year I mostly just asked people, with a wondering look, what they thought about gold. Is the price rise something you understand? Well, most people, if they even think about it, still don’t really understand it. If they own anything at all, it is a few shares of Newmont.
No, as great as the last 10 years have been, we still have much left to see. Sure, I’d be crazy to say that we’ll never have a down year. We’ve already beaten the odds. Each passing year is a tremendous statistical obstacle for yet another consecutive annual win. And yet, if (when) gold finally has a losing year, I think we’ll see choruses of “Ha! I knew it was phony! Stocks are really the place to be!”
Knowing full well that a person would have to be crazy to try to forecast anything over one year, here goes: For gold and silver, everything tells me that they will continue strong. However, I’m waiting to be proven wrong. You don’t ever see a major market go up 10 consecutive years. For gold to increase again next year would make it 11.
At some point, you throw up your hands.
For gold, we clearly are in uncharted territory. No one knows what is going to happen in the short term. But I believe that 10 straight years of gain and still keeping somewhat under the radar screen means that there is much more to come. It also means that, slowly but surely, gold is making its way back into the monetary system of the world. And silver is not far behind. This will be the story of the next decade.
FINANCIALS ARE STILL PLAYING THE BREAKOUT GAME
The bulls are working to end the long sideways saga of XLF.
A few times last year, we checked in with the action in XLF, the big financial stock fund. With large weightings in giants like JPMorgan, Goldman Sachs, Wells Fargo, American Express, and Bank of America, this fund rises and falls with America’s ability to earn money, invest money, service debts, launch new businesses, and generally just “get along.”
In 2009, XLF enjoyed a big rebound off its credit-panic lows. But in August that year, the uptrend stalled out and turned into a long period of sideways trading action. It’s still drifting sidewaysâ€¦ though in the past few months, the bulls have managed to push XLF past $16 per share. It’s now in the upper reaches of this big sideways pattern.
XLF’s holdings are the backbone of our banking and credit systemâ€¦ so its share price is a good clue to what’s really happening in the economy, no matter what politicians or CNBC commentators are blathering about. Money talks and you-know-what walks. You can listen in with XLF. Right now, it’s starting to say “higher prices for me.”