Stock market investors are starting to admit that gold is outperforming just about every other investment category.
In 2010, the price of gold will have risen nearly 30%when this week is through. This far outpaces the Dow, and just about every other stock market index.
But there are two other aspects which are even more important for investors to realize:
1. Gold itself outperformed gold stocks in 2010. This was not supposed to happen. Gold share pundits have insisted for years that gold stocks outpace gold in a bull market. They were wrong in 2010. Investors who attempted to use gold shares as a substitute for gold suffered through poor performance, combined with all the increased risks of investing in shares of companies, as opposed to hard assets.
2. Gold has re-emerged as a major factor in the world investment markets, with a 10-year winning streak and a record-breaking 2010. This means that it has a psychological beach head with investors, who will continue to look to the yellow metal for security as well as profits. Worries about the world economy, monetary policy and the fiscal nightmares of developed nations in Europe, as well as the USA are not going away any time soon. There are no policy proposals on the table in Washington, DC poised to rescue the US and world economies from the deep economic malaise we find ourselves in.
As such, gold should continue to be strong in 2011.