Gold and silver have been relatively quiet since the fall. A major reason for this is investor sentiment remains mixed, but recent data is suggesting that is starting to change and could propel gold and silver higher.
Recently I came across a debate that questioned what was wrong with gold since it only returned 7% in 2012, well below its decade long average.
The counter argument for gold’s bullishness boiled down to comparing 2012 with 2004 since that was the last time gold underperformed its average. The logic used was something like this:
Gold underperformed in 2004, returning only 5% that year, well below its 12 year average of 17%.
But, the following years, in 2005, 2006, and 2007 it returned 18%, 23%, and 31% annually. Therefore, because gold underperformed in 2012, just like it did in 2004, it is poised to outperform in 2013, 2014, and 2015.
Reasoning such as this just goes to show you can find a statistic for anything (even the statisticians, though, would have a field day with the above flawed logic).
This is just another easy example of the confirmation bias that investors have.
By ETFguide.com Jan 30, 2013 11:00 am