Reply #55: Precious metals top performers in 2006

[54anickel]

http://today.reuters.com/news/articlebusiness.aspx?type=ousiv&storyID=2006-12-29T165201Z_01_N29407349_RTRIDST_0_BUSINESSPRO-MARKETS-GOLD-YEAREND-DC.XML&from=business

LONDON (Reuters) - Precious metals provided among the heftiest returns of any asset class in 2006, and prices were expected to stay strong in the new year as investors continue pumping money into the sector through futures and new commodity-backed securities, analysts said.

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Even as weaker energy prices depressed commodity indexes, gold outperformed the fat 16.8 percent return of the Dow Jones industrial stock average, which extended a string of records to an all time high of 12,529 on Thursday.

Total returns for U.S. government bond indexes, year to date, were about 4 percent, while money market funds were paying about 5 percent.

That looked good compared with the 7.7 percent decline in the Reuters/Jefferies CRB futures index, which includes 19 commodities, and a 1.3 percent fall in U.S. crude oil <CLc1>, but not compared with precious metals overall.

Gold, of all commodities, is considered a financial asset, because of its historic monetary role as an alternative to investing in the dollar. Gold was burnished by a 7.9 percent decline in the trade-weighed dollar <=USD> this year.

But its performance paled next to sister metals like silver <XAG=>, which was closing 2006 almost 46 percent higher, at around $12.78/85, after prices spiked to a quarter-century peak of $15.17 an ounce in May.

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