Gold vs. Stocks - Gold Wins Another Round

On April 26, the markets reached a post crisis high, then crashed in a flash, then recovered, then got beat down once again to flash crash levels.

They said the flash crash was an accident and who knows, maybe it was.Nonetheless, we revisited those levels, down 10% or so from post crisis highs.Now, the question remains, did the market experience a natural correction or is there another round of beatings ahead?Time always tells.

Meanwhile, gold appears to have suffered a similar beating.Gold reached new highs around $1250 an ounce on May 12, only to slide back to $1185 as I write.So we ask the same question.Has the overall direction of the gold charts changed from bullish to bearish?

I will submit, nothing has changed.Since the market peaked on April 26 gold is up 2.5% as I take a snapshot of spot prices at this moment.That translates to a 30% annualized return - about the same pace of increase as gold deliverd in 2009.

For those who own stocks but are diversified into gold, you have to admit, it felt pretty good amidst all of the market volatility in the last 30 days.Has anything changed regarding gold demand?Gold demand is still on the rise, Cramer tells us gold is getting tougher to find and mine and that we will see $2000 gold.

In the end gold, once again makes a solid case for Diversification! Diversification! Diversification!