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How 2012’s top money ideas have fared so far, and what’s next
Money » Advice to investors on what course corrections they should consider.

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The security of gold • Gold prices have been volatile this year. Exchange-traded proxies SPDR Gold Trust and iShares Gold Trust are essentially flat. Market Vectors Gold Miners ETF, a proxy for the group, is down 19 percent so far in 2012.

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As for what to do next, weak global growth is dragging on gold prices. India and China are among the world’s largest gold buyers, and the slowdown in those major economies have taken a toll on precious metals.

Gold may have lost its speculative quality of recent years, but it still protects against global upheaval. "Gold is a valuable part of a portfolio," said Nicholas Colas, ConvergEx Group chief market strategist. "It’s the one thing that will work when nothing else does. If policymakers make a dramatic misstep, gold is good insurance. If they get it right, then the other 90 percent of your portfolio is going to do so good, you won’t mind."

Hail the chief • Presidential election years typically are not the strongest in the four-year market cycle; the third year is. But 2011 was unusually weak; and 2012 so far has been unusually strong.

U.S. stocks have gained 5.7 percent on average in election years since 1944, according to S&P Capital IQ. But the S&P 500 has already topped that, rising more than 7 percent, including dividends, for the year through July 12.

As for what to do next, U.S. stocks tend to do better in the fourth quarter of an election year, once the votes are counted. Third quarters are generally weak, and election years have been no exception. That could change this year if the Fed pumps liquidity into the markets after its mid-September meeting.

In praise of safety • In this uncertain geopolitical environment, alarming headlines are giving investors headaches. Focusing on safety and income at a reasonable price — the advice in January from David Rosenberg, chief economist & strategist at Toronto-based wealth manager Gluskin Sheff + Associates — has proved prescient.

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As for what to do next, a Wall Street adage says that when growth is everywhere, the market prices it like water. When growth is scarce, it’s priced like diamonds.

Welcome to the Diamond District. Investors have to pay up for growth. Safety and income is also more expensive. But, again, the goal of investors nowadays should be the return of capital, not return on capital.

Moreover, safety can still be had at a reasonable price if you know where to look. At Gluskin Sheff, clients have positions in consumer-related businesses, including Home Depot Inc., which yields 2.3 percent, and General Growth Properties Inc., with a 2.2 percent yield.

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