spiritwarrior7
New member
I ran the numbers and it seems gold has done well (13.9% p.a.) over the last 20 years (see below for details). Why then do I often see people in the finance community poo-poo gold as a worthwhile investment? Granted, gold didn't do as well over the last 40 years (11.5% p.a.) since it was probably helped by recent recessions, but otherwise the only downsides I can see to owning physical gold are the risk of theft and the high buy-sell spread for krugerrands.
Let's consider the gold price over the last 20 years in comparison to some local and US stock market indices.
At month-end of August 2003:
That being said, over the last 40 years gold increased by 11.5% p.a., CPI by 7.9% p.a. and S&P 500 by 16.5% p.a.
EDIT: typos and clarity
Let's consider the gold price over the last 20 years in comparison to some local and US stock market indices.
At month-end of August 2003:
- Gold price: (converted to ZAR on the day): R 2658.70
- JSE All Share Index: R 9226.20
- S&P 500 Index (converted to ZAR on the day): R 7449.19
- Gold price (converted to ZAR): R 36080.83
- JSE All Share Index: R 74987.21
- S&P 500 Index (converted to ZAR): R 84027.76
- Gold: 13.9% p.a.
- JSE All Share Index: 11.0% p.a.
- S&P 500 Index: 12.9% p.a.
That being said, over the last 40 years gold increased by 11.5% p.a., CPI by 7.9% p.a. and S&P 500 by 16.5% p.a.
EDIT: typos and clarity