This article talks about 3 hypothetical portfolios for Stocks, Gold and Silver that started in 1981 (dividends being reinvested). In the last 3 years Gold has outperformed SPY with less volatility but this is NOT the historical norm. http://seekingalpha.com/article/271054-the-best-long-term-investment-gold-vs-silver-vs-s-p-500 >> Investing in stocks had been much more profitable in the first 20 years. In 2000 the average value of your stock holdings would have been $136,028, whereas silver and gold would have been worth $17,563 and $15,476, respectively. Furthermore, silver and gold investments would have had a negative or near zero compounded annual return until 2004. Since then however, the precious metals have begun to quickly make up ground and, helped by S&P 500's 57% crash during the last recession, silver managed to slightly surpass stocks in 2010, while gold was still behind. On April 28, 2011, when the price of silver was near its peak, silver was a clear winner with a value of $233,917 and a compounded annual return of 11.8% compared to S&P 500's $173,400 and 10.3%, and gold's $115,889 and 8.12% However, the subsequent price decline put silver behind S&P 500. As of May 18 close, the stock portfolio would have been valued at $170,931; silver at $166,144; and gold at $112,880.
Of, course you are right, Shortie. Over time gold preserves wealth and keeps you even, on average, with inflation. But it's a terrible long term investment. Every time I say that I get slammed by the gold folks. This time will probably be no different. If you know how to trade it, and take advantage of the various periods of hysteria, as now, you certainly can make a lot of money in gold. But no one should buy gold and hold it forever, unless you are already wealthy and don't care to make anymore money. And too, there is always the risk that someone is going to wake up on the wrong side of the bed and yell "the emperor has no clothes." It will be just a realization the spot price has got so far ahead of intrinsic value that there is no one that wants to buy any more, and everyone who will buy has already done so. The central banks will certainly play a role here. I'm not for a moment suggesting that a person is necessarily a fool to trade gold, but certainly they are a fool to buy it and forget it. Everything I've written above, except for the paragraph immediately above this one, is from the viewpoint of someone living in a U.S. dollar economy (e.g., the U.S., Ecuador, etc.).
The rise from 1000 to 1500 was not really parabolic, else I'd declared the top within 6 months... We're in one of those scenarios where the rise is slow and prolonged, followed by a sudden and very steep drop...
It is an incorrect conclusion because they did not include bonds, and the fees investors may have paid to manage funds. Bonds got better returns), which is not surprising to me because lenders may have implicit free options (in laws, asymmetry of leading vs. following, effect of financial means on policies). One would never find a lender losing his investment, without all equity holders losing theirs. Does anyone have the chart numbers in excel? I want to discuss the topic on one of my sites.
try copy-paste into excel the table that's in the article itself not in the image i posted. it should work.