Asset returns often shift right around the beginning of the decade, so gold seems likely to outperform in the 2020s. Although the gold price went up about 30% between January of 2010 and December of 2019, US stocks were the top performers over the last ten years. That isn’t good news for stocks from either a psychological or a valuation point of view. The stock market is priced to perfection, which typically happens right before a fall.

New decades have a history of bringing dramatic changes to financial markets. October of 1929 was a long-term turning point for the US stock market. The Japanese stock market has yet to return to the highs reached in the last days of 1989. That is about 30 years ago now. To be fair, January of 1980 was a top for gold. However, March of 2000 was much worse for the Nasdaq. These reversals of fortune every decade form a pattern.

Decades seem to take on personalities that become reinforced with each passing year. The “Roaring 20s,” the “inflation of the 1970s,” the so-called “Decade of Greed” in the 1980s, the “1990s Tech Bubble,” and the “Lost Decade” of 2000-2009 have all entered the public imagination. Perhaps 2010-2019 will become known as “Tech Bubble 2.0.” In any case, the final year of a decade is often excessive. It is almost as if there is a last call, a last chance to participate, one last time to party like it’s 1999. In the new decade, mass psychology tends to change quickly. The old confidence comes into question, and then into disrepute.

If you don’t care about public opinion itself, then the results of its excesses make the need for a reversal even more apparent. In 2009, the P/E 10 ratio valuation measure for the S&P 500 fell below 15 for the first time since 1990. Stocks were priced for another 1990s style run-up. The P/E 10 ratio is now above 30, which is higher than it was at the beginning of 2008.

In a new decade, everything old is new again. Many investors forgot about gold during the 1990s stock boom, and I fear that may have happened again. People forget that while 2000-2009 was a lost decade for stocks, it was a golden age for precious metals. The new decade for gold is already starting. Gold went up over 13% during the first eleven months of 2019. Yet, gold does not receive the press coverage of stocks or even bonds. That is a good sign for investors. The new decade looks very promising for gold.