Gold and Brett Favre: Outperformed by Upstarts?

The last two years have been eventful for Gold and Brett Favre. The value of Gold careened upward as the economic landscape turned cloudy and investors sought the safety of Gold. Brett Favre joined a loaded Minnesota Vikings team that propelled him to his best statistical (QB rating) season ever, leaving him one win short of the Super Bowl. So, if someone asked you to pick the best performers in each category — Metals and QBs — the last two years who would you pick? The choices are Gold versus Silver and Brett Favre versus new Packer QB Aaron Rodgers? Believe it or not, the upstart has outperformed the more well known standard in both cases. Here’s proof:

While Favre and Gold have been getting the lion’s share of headlines, both of their “upstarts” have been quietly outperforming. Will this trend continue? Are Favre and Gold heading towards second tier status? Let’s review each situation.

Last year Brett Favre had a magnificent season but in 2010 Favre’s performance has fallen off significantly. Whether it be touchdowns, interceptions, wins or overall QB rating — Favre needs to pick up his performance. Sure there are a lot of reasons for these poor numbers — Favre’s tendinitis and gimpy ankle, new faces in the offense due to injuries/departures and a firestorm of controversy surrounding sexual harassment allegations. But Favre has played with injuries, new faces and off the the field drama his whole career. On the other hand his successor in Green Bay, Aaron Rodgers, has outplayed Favre thus far while dealing with injuries and new faces, albeit he has avoided Favre like controversy. While many felt this was destined to happen, some are surprised to see Rodgers outplaying Favre with less offensive talent around him and significantly less QB experience. It seems betting on Favre right now may be the contrarian play and Rodgers is now the pace setter. (incidentally Rodgers beat Favre for the first time this past Sunday night)

In 2010 investors continued to pile into Gold for inflation, deflation and currency devaluation concerns. (basically any concern worked in Gold’s favor…) It seemed as though Gold could do nothing wrong as it chugged along to all time highs in early October. Since about the third week in October however Gold has corrected, falling from all time highs on concern over weakening China led demand and a stronger dollar. Competing for investor attention in the precious metals arena is Silver. It also corrected with Gold but has rebounded more sharply than its yellow competition. Oddly enough, even though Gold is everywhere and universally touted, Silver has outperformed Gold this year by a mile. SLV, the iShares Silver ETF has gained 40% ytd vs. GLD, the SPDR Gold ETF, with a 24% move upward. In fact looking back over the last 2 years SLV has racked up a 160% gain versus GLD at just under 80%! To be fair Silver, often referred to as the poor man’s gold, is under assault by some who believe its price is being manipulated. In addition some believe that Silver’s abundance versus Gold and heavy industrial use make it a much less stable asset than Gold and one that should trade at a ratio far less than the current roughly 55 to 1 ratio. So while Gold has been outperformed in recent years by Silver, one should be cautious about performance chasing in an area with considerable cloudiness. In my view, Gold would be a significantly more stable allocation than Silver going forward.

So there you have it, Rodgers over Favre for now (may be a break out…) but Gold over Silver is my future outlook for these areas. Look for many more twists and turns in the story of Favre and Gold in the coming months. The drama will be sure to continue.