I know of a fund manager (named Mr. Gold)

This guy has beaten the market 10 of the last 12 years. $10,000 put into his fund in 1999 (Dec 31st) would have turned into over $37,000 while $10,000 into the S&P in 1999 would have turned into $9,000.

In 2008 when the S&P lost 37% of its value this fund manager was prudent and made sure that his fund still returned 3.5% for the year.

Obviously I am talking about the commodity of Gold and not a mutual fund but the point I am making here is if I WAS talking about a mutual fund all the performance chasing sheep out there would be begging me to tell them how they could give this fund manager their money.

But tell the person that this is gold and all of the sudden their eyes glaze over. In their zombie like state they utter something like “Isn’t gold risky” or “I heard gold is a big bubble”. I actually was telling someone about gold 3-4 years ago at a cookout and they vehemently argued with me that it was illegal to own gold and they did not believe I owned any.

A big deal is being made about all the commercials on talk radio and CNBC/Fox News for buying gold. I admit that this bothered me as well which is why my last call on gold when we were trading above $1100 in November 2009 was “Gold: long term hold, short term reduce”

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=287772&t=01001808419327792238

But the reason I made this call was I believed the dollar index was going to rally from 75.
I said:

“The problem is the dollar index hit 75, rallied to 76.5 and now is headed to right above 75 in my opinion to make a short term higher low. The insane downside momentum has abated even with today’s 1% decline. When momentum slows the moving averages flatten out and that is how you get rallies… even in something as fundamentally worthless as the US dollar.”

Well flash forward 3 months and now the dollar index is above 80 and gold has gotten taken down over 12% off its highs. Most of the gold mining stocks have lost 30% or more off their highs. If you noticed in CAPS over the last week I was closing all my hugely profitable gold and silver miner shorts.

Is the correction over in gold and gold related stocks?? I don’t think it is yet. I still think gold is going to correct back to 3 digits to scare all the late gold buyers.

But what is funny to me is that will NOT change that gold is in a BULL MARKET.

This will also not change the fact that gold will continue to beat the S&P for quite some time to come….

The reason gold is not a bubble is the common person still HATES gold and thinks it’s a huge bubble. Sure some investment gurus are huge gold bugs and so are some vocal folks on TV but as someone who has lived through quite a few bubbles in his life knows its not until the COMMON person gets involved with an item that it becomes a bubble. Do you remember the tech bubble? Every person at my gym and every one of my friends was talking about their next tech stock and how the “New Economy” had changed stock valuation forever. Do you remember the real estate bubble? Home prices can never fall! They are not making any more land! Real estate is the path to wealth! I just got back from this Carleton Sheets seminar!! Your mailman was saying that and so were your mom and brother. Ask those same people now what they think about gold and they will tell you it is a big, risky, scary bubble.

This is why in my opinion although gold could have more short-term downside it will CONTINUE to crush the S&P for years to come.

End RANT!