Today’s essay will shock you… for the claim I’m about to make may lead you to believe I’m insane. Today, I’m telling you that you’ve probably lost money in stocks over the past three years.

Now, before you point out how stocks have soared since the U.S. invaded Iraq in 2003… before you point out how your brokerage statement says stocks have made you wealthier during the past three years… I have a very important chart to show you. It paints a very different picture than the one your broker is showing you.

First, let’s get an idea of what stocks have done in recent history.

The most commonly used yardstick of U.S. stocks, the S&P 500, has climbed 37% since March 2003. The Dow Industrial Average has climbed 47%. These are respectable returns on our money.

But let’s gauge those returns in terms that we can eat. Let’s gauge our returns in terms we can drive with, live in, and take vacations on. Let’s look at those returns measured in real money, and by “real money,” I mean gold.

Stocks Vs. Gold, Past 5 Years

In other words, when measured in real money, stocks are at the same level as March 2003.

There is a simple explanation for all this…

When the world’s central banks flood the world with liquidity and super cheap interest rates, the real value of our paper money declines against tangible “stuff” like gold, oil, and land.

And although our stocks have gained value in terms of dollars, when we take our profits and try to buy a tank of gasoline, a hotel room, or a hamburger, we find our wealth hasn’t increased a dime. Rising oil prices have made gasoline more expensive. Soaring land prices have made hotel rooms expensive, with the average U.S. hotel room costing $90.

Fast food is even creeping up in price… As my friend Porter Stansberry recently pointed out, Burger King just became the second major fast food change to bump up the introductory price of their value menu to from $0.99 to $1.39. 

Maybe we can take a look at a stocks vs. burgers chart in a futureDailyWealth, but we’ve run out space today.

To sum up, when you’re counting the chips you’ve won in stocks or real estate, make sure to count them correctly. Make sure to count them in gold. 

And if you don’t have your share of gold, we’re in a long gold bull market, and it’s time to buy some. Nowadays, it’s never been easier to do so. The symbol is GLD.

Good investing,

Brian Hunt

Correction: In yesterday's DailyWealth, we listed the name Apache Corp as a recommended stock to play a rise in natural gas. Mr. Badiali's recommended play (as recommended in the S&A Oil Report) should have been noted as Anadarko Petroleum (APC).