Over the past year gold has had a fabulous run. However, over the past 25 years its performance is equal to that of the S&P. Over the past 100 years its performances is about half that of the S&P. For long term investments I am always looking for performance that significantly beats the S&P. Over the past 16 years Stars has outperformed the S&P by 19 percentage points per year.

The doubling of gold price over the past year will lead to discovering more. Also the search for rare earths will lead to more gold production. Gold like all physical assets is more difficult to trade than equities.

The paper aspect of equities gives the Stars buy and hold strategy two enormous advantages that produce the unbelievable returns. How could gold ever outperform the S&P by 17 times? Stars does it in two ways. Cap weighted ETFs (SPY and TQQQ) are always improving what they own without creating a taxable event. The only taxes paid on the Stars model are about 2.5% for the gains from annual rebalancing. The second advantage is that in corrections many more shares of TQQQ are bought at cents on the dollar. Coming off the bottom everyone wants to own the best stocks and the volatility of TQQQ explodes.

In a market rally after a correction gold has one increment. TQQQ has 4 increments with a volatility of 6. It acts like 24 increments of the S&P. Bottom line physical assets have no way to compete with Stars.