Gold Can’t Beat Checking Accounts 30 Years After Peak

Discussion in 'Wall St. News' started by crash n burn, Dec 7, 2009.

  1. this time is different? :D

    Dec. 7 (Bloomberg)

    Gold’s best year in three decades has yet to match the returns of an interest-bearing checking account for anyone who bought the most malleable of metals coveted for at least 5,000 years during the last peak in January, 1980.

    Investors who paid $850 an ounce back then earned 44 percent as gold reached a record $1,226.56 on Dec. 3 in London. The Standard & Poor’s 500 stock index produced a 22-fold return with dividends reinvested, Treasuries rose 11-fold and cash in the average U.S. checking account rose at least 92 percent. On an inflation-adjusted basis, gold investors are still 79 percent away from getting their money back.
  2. This is complete crap. Let's take a moment in time that is convenient and show gold vs. other vehicles throughout that specifically chosen moment in time (when gold last peaked).

    Lies, damned lies, statistics.
  3. we got a guy in the local paper who invested his entire savings during the 90s into gold when it was what 300 an ounce?. it's worth more than a million now.

    gold flucuates according to economic uncertainity. to compare it to a

    checking acccount is unfair.

    if this investor bought gold NOT in the 80s AT THE PEAK but in the 90s when gold was near the low at about 300 an ounce his returns would be about 400% now.

    im not a gold bug, but putting gold in this light is misleading.
  4. That's pretty much what I just said.
  5. Since when do interest rates and-or reinvested dividends keep pace with (or beat) the inflation component?

    I don't have figures, but I do know 30-years ago $1 had more purchasing power than $1 today. In the real world, and for thousands of years, gold preserves purchasing power, which is quite different than increasing wealth.
  6. You realize interest rates 30+ years ago were 12-15%?

    Obviously interest is a very important element to analyze when looking at the purchasing power of a fiat currency over time. The gold bugs routinely "forget" this fact.

    Thanks to positive real interest rates for the majority of the last 30 years, the purchasing power of $1 USD (+ LIBOR interest - CPI) is higher than 30 years ago.
  7. What was the total money supply when interest rates were at those levels? The real rate of inflation during that period was what? Again, without the actual numbers (assuming they were factual back then) there is no argument, just statements.
  8. zdreg


    maxitronixy -

    thx for posting for with facts and dates.
  9. Wonder what motives make some posters want to fight the trend?
  10. Onlygold


    People also forget that Fed rate now is zero. In 2001 rate was 6% and slammed down reaching a bottom of 1% in 2004. 1% was raised back to 5% in 2006 and everything collapsed. This zero percent is the end Fed rate and the reason why India took 200 tons.

    The moral of the OP article is: Don't buy at the top and sell at the bottom.
    #10     Dec 7, 2009