Tuesday, January 05, 2010

Gold Isn't Gaining All That Much... In Canadian Dollars!

5 January 2010

As a Canadian, I have for the past decade often sat by in envy as the US-based Gold Bugs Index (^HUI) has in almost all cases outperformed the Toronto Gold Index (^SPTGD), sometimes dramatically.

Adrian Ash makes clear the source of my dilemma.

Gold has gained considerably less in Canadian Dollars than in any other of 13 world currencies. This is, of course, because the Canadian currency has retained its value best of the 13 global currencies over the past decade.

That is, it is my currency that is appreciating against virtually every other world currency. So much so in fact that the rise in the Loonie has somewhat outperformed my gold investments!

Here is Mr. Ash's chart:

On a positive note, while gold's gain of 179% in Canadian dollar terms may be the smallest in terms of any of the world's 13 leading currencies, this is still awesome performance in context.

That is, as Canadian gold investors, our investments may be growing relatively modestly, but they are turbocharged by our outperforming currency!

Am I better to hold Canadian dollars - the world's best-performing currency (of those listed) over the past decade - or gold? The chart makes the matter clear. Gold is a better store of value by far than any global currency. (Note: The Swiss Franc has outperformed the Loonie between 2000 and 2010, but gold has gained more than 150% even in this ultra-strong currency.)

My advice?

Hold gold for long-term protection of your wealth and life savings....

1 comment:

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