GOLDBUGS AMEX Goldbugs Index (GOLD)

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JUST TO BE SURE... OWN BOTH GOLD AND STOCKS

A question on investors' minds right now: "If the dollar is going to lose more of its value over the coming years, which is a better refuge? Gold, like half of the experts say? Or stocks, like the other half say?

Answer: As you can see from today's chart, the market likes gold better... but not by much.

Today's chart shows the performance of gold (blue line) compared with the performance of stocks (black line). The percentages on the right-hand side show the gains since May. This is when the U.S. dollar decline kicked into high gear.

Gold is a dollar refuge now for the same reason it has been for thousands of years. It represents real money that can't be printed at a whim to buy votes. Stocks are a dollar refuge because they represent claims on the profits and assets of operating businesses... which tend to grow over time.

Gold is up about 21% since the dollar started plunging. Stocks, which exhibit very similar price action, are up about 17.5% in the same period. This is the market's way of saying, "Both groups are right... but the gold group is right by a little bit more. Own some of both, just to cover your bases."