I have a friend who works as an investment fund manager in Norway. His fund is up a whopping 26% this year, making it Norway's best performing fund. But there's a catch. The Norwegian currency is down 10% relative to the dollar, and the dollar is down 20% relative to gold. This means that his fund made 16% relative to the dollar, and relative to gold, it's down 4%.
This illustrates the importance of relative measures. When looking at performance, we must always ask what the performance is measured against, and we must choose a measure that has stood the test of time. That measure can only be gold, because that's the only measure that has kept its purchasing power. All other measures will make it look like we're doing fine when in reality, we're loosing money.
In related news, the financial press in Norway has been recommending that people sell their gold because of the current correction in its dollar price. However, the gold priced in Norwegian kroner is continuing up. Anyone selling gold for Norwegian kroner has so far been loosing money on this advice.
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| Gold eagle |
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