Gold as an Investment

Gold as an investment stinks. The gold pushers are always on websites like Newsmax and talk radio. I have a problem when talk radio hosts read gold ads. When reading an add for gold, they seem to be giving financial advice. Some people who put a lot of trust in the talk show hosts may purchase a large amount of gold and lose lots of money over time.

In 1975, gold was about $175/oz
In Jan 1980, gold was at $620/oz.
In Jan 1990, gold was at $410/oz.
The lowest point of the 1980s, gold was at about $300.
Today it is $494.

The stock indexes in comparison:
In Jan 1980, the Dow was at 830.
In Jan 1990, the Dow was about 2750
Now it's about 10885, 13x 1980 and 4x 1990
In Jan 1980, the S&P 500 was about 108
In Jan 1990, the S&P 500 was about 355
Now about 1275, 11.8 x 1980 & 3.6 x 1990.

Although the price of gold in 1980 was the big high point, and it's a little unfair to use that price, there is a major distinction. It's been 25 years since gold peaked! In 2025, 25 years after the March 2000 peak of the Dow, the Dow will be MUCH MUCH higher than its peak of 11722.

When goldophiles show charts of the price of gold or figure percent increases, they always begin in 1971 when gold was released from its fixed price of $35/oz. However, people in the United States weren't allowed to own gold until 1975, when it was already about $175/ oz. (Foriegn market forces had quickly driven the price up.) Thus all returns need to be looked at in comparison to 1975 at $175/oz, not 1971. If you bought gold in 1975 you have less than 3 times your money today (not accounting for inflation). If you bought an S&P mutual fund in 1975, at about 90, you'd have about 14 times your money.

....but go ahead, keep buying gold.