Gold Against Stocks Over the Decades: Not as Impressive

Gold has had a pretty good run over the past few years. But over the past few decades, gold has badly trailed stocks. Here’s a look at gold divided by the Wilshire 5000 Total Return Index.

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Comments

[User 330485:]

go buy the stock market and sell me your gold!

Mar 22 05:15 AM

[nevket240:]

Anyone who bought $1 miilion in Gold in 2000 has now trebled their cash. How have the stock investors profited???
Gold, as indicated by your chart has a lllloooonnnggg way to go before this sh#tfight is over.
regards

Mar 22 05:48 AM

[DONE_SONZ:]

Buy gold stocks then.I like physical gold too,but the miners better.

Mar 22 09:01 AM

[Zoltan L. K...:]

Gold really had a good run with the economy growing and commodities rising. Now it has a good run because of global uncertainty. That isnt bad, or?

Mar 22 10:09 AM

[BrunoT:]

This sort of logical fallicy is what is going to make a lot of people very poor (and others contrarian to it, very rich) in the coming years.

Just because something "was" for a period of time when conditions were different, doesn't mean it will always be in the future. You adjust your investments to the conditions.

The fact is, most "investor" class participants are young enough that they came of age in a 25 year bull market in stocks. Anyone under about 60 never had enough to invest to even know there were actually bad times to be in stocks. If they had languished from '68 to '82 in stocks as gold soared while developing their world view they may have garnered an appreciation that stocks don't always rise, just as recently their non-thinking classmates learned the lesson that real estate doesn't always rise in value.

The problem is some want to avoid a deeper understanding of economics by using silly rules of thumb and historical precedents as a short cut vs the hard work and time it takes to obtain a true understanding. They want something they can obtain at the water cooler in 5 minutes.

Mar 22 10:20 AM

[CoinMiner:]

Archaeology indicates that gold has traded as a currency and functioned as a store of wealth for over 6,000 years. 60 years is one percent of that time and thirty years is one half of one percent of that time. Stocks have only traded for roughly 600 years. Your analysis only covers a thirty year period.

Why did you choose that arbitrary time span? (Hopefully not just to reinforce your initial thesis.)

How many of those companies that were one in the Wilshire have gone bankrupt in 30 years? In the majority of corporate bankruptcies common stock becomes worthless. For example, had you chosen the original DOW 30 to analyze against gold performance, you would learn that 29 or those 30 companies no longer exist. That’s right 96.7 percent of your investment would have been wiped out. This type of analysis usually leaves out that fact also, go figure.

After looking at the longer time scales, and broader horizons; and against financial and economic benchmarks rather than just fiscal ones – the reasons men, banks, and governments gravitate towards gold become clearer.

Thanks for your article.

Mar 22 11:38 AM

[fireball:]

if you adjust the dollars for inflation i wonder how gold stacks up.
i thought gold and silver were to protect buying power. i never regarded them as an investment. adjusting for inflation my metal holdings seem to have remained constant so far.

Mar 22 11:42 AM

[loanme350:]

WOW... first negative statement on gold in a while and no one agrees .... at this point there is no reason for me to start shooting holes in this guys arguement....

Mar 22 12:52 PM

[ed233:]

I don't know what your point is in this article. For sure 1981 was in my opinion a warning sign. Obviously, many have not heeded this warning and look at how much money has been flushed down the toilet. Trillions!!!!The money that was made in the market from 1985 to date has eroded so much so that the same people are sacred to death. They are holding treasuries at OOOO percent. Doesn't sound like a good investment to me. I'll bet even Warren Buffet would like to have those recent investments he made in those wall street banks with their exotic toxic instruments. Question: When will the US treasuries become toxic instruments? Sure looks like they're heading that way. First step get rid of Mr. Geithner. He doesn't even have a team. A new financial team without conflicts of interest is needed along with some innovation and economic creativeness. US has brilliant talent to tap into. You can't tell me Mr. Geithner is the only one in USA to do this job. If he can't calculate his own tax liability why should you think he should handle your tax dollars. Rediculous. Obama come on; where is that change we all can believe in!!!!Everyone should send Mr. Obama an e-mail directly to persuade him now to get back onto the right track before it's too late. I'm in Canada he wouldn't believe me.

Mar 22 01:10 PM

[fredissy:]

Since 1975, gold has risen by 6.8. The basic stock market has risen by a factor of 8.5, and of course there were dividends to boot. So, you are certainly right, looking back that far. But now that the "fraud" that has been our economy over those years has been revealed. And the new crooks that run things are perpetrating that fraud to ever higher levels, can any sane person believe that the future (if we have one) is going to look like the past? Good article....I think you wanted responses. This one is for you, and everyone. Buy some gold.......and buy some silver too!!

Mar 22 01:41 PM

[Terry Finn:]

I'm not sure what decades you are talking about, but I'll take $35./oz in 1968 to today's $950./oz. I would consider the last 4 decade to be relavent to most Americans. In forty short years $35. to $950 per ounce of gold is hard to beat.

Mar 22 02:04 PM

[Gedankonomist:]

Here's the DJIA/Gold ratio over the last several decades:

tinyurl.com/cwa4cw

You got to know when to buy and sell. It's like anything else in the market.

Mar 22 08:16 PM

[SB:]

I see a rounding bottom - expect approx 5x appreciation in 2 years

Mar 23 08:37 AM