What Happened in the Last Recession and Bear Market?

Like most Americans here in the United States of Amnesia you may have already forgotten, but the last bear market and official recession we had was in the Y2K and stock bubble collapse of 2000-2003. Here is a chart showing a rough but fairly good comparison of the SP 500 action from the market tops, then and now. By popular request, we were asked to show the performance of gold and silver during the entire timeframe spanning the bear market and recession. We have mapped this out, on a percentage basis, in this second chart.
As you can see, gold was a stellar performer as the dollar was devalued to combat the downturn, even though we saw a brief whiff of deflation in M1 during this period, although most probably do not remember the big deflation scare. Silver did a 'sideways chop' throughout, reflecting its own market conditions and slack demand from industrial usages.

We have to note, and will put to you with emphasis, that just because this is how things happened the last time, that does not mean this is how they will happen this time around. Not at all. But its a very positive thing to bother to consider the data when people around you are spinning theories, and pointing to historic examples like Japan in the 1980's and 1990's, which we remember extremely well, being very preoccupied with in-country Japanese business ventures during the latter half of the Japan bust.

We have to admit we were extremely surprised by one thing. A good friend asked us to also take a look at the performance of the miners in this period as represented by the Gold Bugs Index (HUI). Our take on this was that the miners would have been clocked along with the SP500 during this period.

We stand corrected on that assumption, and remind ourselves again, to listen to what others may have to say, hear their arguments, but always, always look at the data.