The CEF Experiment

I am setting up a experiment with the objective to demonstrate that the average investor can reap double digit returns with a simple dollar cost averaging strategy.  See the June 9th’s article on the “No Brainer Investment Strategy to Double Digit Returns” for the basis of the methodology.  We will use two ETFs to validate this theory – Central Fund of Canada (CEF) and Market Vectors Gold Miners (GDX).  Each month we will purchase $1000 of CEF and GDX and compare it versus the S&P 500. Purchases will take place at the close on the 4th of each of month unless it falls on the weekend or holiday.  In that case it will be purchased at the next day’s close.

As of June 5, 2006 CEF was outperforming the S&P 500 13.02% vs. -0.64%.  CEF is compounded monthly.  S&P 500 is YTD return without compounding.

CEF
Closing Price
Monthly
Total
S&P 500
Jan
Feb
Mar
Apr
May
Jun

04-Jan-06

                   
04-Dec-06
                   
06-Nov-06
                   
04-Oct-06
                   
04-Sep-06
                   
04-Aug-06
                   
05-Jul-06
                   
05-Jun-06
$9.11 -9.80% 13.02% -0.64% $1283.10 $1184.66 $1160.51 $1120.54 $901.98

$1000

04-May-06
$10.10 24.23% 31.62% 3.05% $1422.54 $1313.39 $1286.62 $1242.31 $1000  
04-Apr-06
$8.13 3.57% 7.93% 2.55% $1145.07 $1057.22 $1035.67 $1000    
06-Mar-06
$7.85 2.08% 6.32% 0.38% $1105.63 $1020.81 $1000.00      
06-Feb-06
$7.69 8.31% 8.31% -0.66% $1083.10 $1000.00        
04-Jan-06
$7.10       $1000.00          

 

The same experiment will be conducted using GDX.  It should significantly outperform both CEF and the S&P 500.  Data starts on 6/4 since GDX was launched on 5/25/06.

GDX
Closing Price
Monthly
Total
S&P 500
Jun
Jul
Aug
Sept
Oct
Nov
Dec

04-Jan-06

                     
04-Dec-06
                    $1000
06-Nov-06
                  $1000  
04-Oct-06
                $1000    
04-Sep-06
              $1000      
04-Aug-06
            $1000        
05-Jul-06
          $1000          
05-Jun-06
$38.13      

$1000

           

 

 

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