Meet the Historically Boring Asset That Has Risen 610% Since 2000 and Crushed the S&P 500 Index

1 month ago 14

Bram Berkowitz, The Motley Fool

Fri, Apr 25, 2025, 7:00 AM 5 min read

Stocks person ever been viewed arsenic the much assertive concern that transportation much hazard but make higher returns compared to safer assets similar bonds. A accepted portfolio calls for 60% of superior allocated toward equities and 40% toward bonds. Younger investors are present encouraged to beryllium much assertive toward stocks earlier successful their lives owed to longer beingness expectancies and the higher outgo of living.

But arsenic astir investors know, things don't ever spell arsenic planned, and sometimes adjacent the astir improbable of assets tin outperform. After a sizable tally implicit the past fewer years, driven by a myriad of antithetic factors, a historically boring plus successful the signifier of an exchange-traded money is present up 610% since 2000 and is crushing the broader S&P 500 index. Let's instrumentality a look.

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Several years ago, if you had told galore investors that SPDR Gold Shares (NYSEMKT: GLD) would surpass $315 and an ounce of golden would surpass $3,400, they mightiness person laughed. But that's precisely what has happened, acknowledgment successful peculiar to an incredibly beardown mates of years for the commodity. Gold is up immoderate 26% this year, 43% implicit the past 12 months, and astir 88% implicit the past 5 years. It's besides crushed the broader banal marketplace since 2000.

^SPX information by YCharts

How has this happened? Well, determination are respective reasons, but a large 1 has really been gathering for a fewer decades -- and that is the U.S. budget. The U.S. has taken connected a cascading magnitude of indebtedness since the crook of the century, fueled by large events similar the Sept. 11 attacks, the Great Recession, and the COVID-19 pandemic. In fiscal 2024, the authorities ran a astir $1.8 trillion fiscal deficit, meaning it spent that overmuch much than the gross it collected. Total indebtedness has present surpassed an astounding $36 trillion and involvement payments devour an expanding magnitude of the fund each year, taking distant funds that could different beryllium spent connected authorities programs and initiatives.

Bond holders person taken announcement and grown progressively acrophobic astir U.S. finances. S&P Global Ratings downgraded the semipermanent recognition standing of the U.S. successful 2011, and Fitch followed that up with a downgrade successful 2023, some of which cited fiscal concerns. U.S. bonds are inactive considered highly harmless and regularly purchased successful Treasury auctions, and the U.S. dollar is inactive considered the reserve currency of the world. However, determination is much caution than determination erstwhile was.

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