I want the truth. You Can't Handle The Truth!

This is from A Few Good Men, but it looks like nobody is telling the truth. Why? The internet is full of price comparisons of preciouse metals vs stocks, ETFs, bonds and currencies. But most of them are adapted to show preciouse metals as bad investment. I know gold is suppose to be hedge against inflation and store of value. But when comparing it with other financial instruments in realistic time frame, gold grew it’s value more than everything else.

Recently I stumbled upon two old articles, Stocks For The Long Run and Since 1979 The S&P 500 Grew 13.5 Times Greater Than The Price Of Gold of David John Marotta.

First article compares gold with stock prices from year 1801. I can not believe this stupidity. Gold had the same price up until 1971, when dollar left the gold standard and only then the market could set real price of gold and other preciouse metals. So, lets compare them from year 1971 then.

In second article the data was set so the S&P 500 would look like very good choice compared to gold. But look again. Here time frame was set from 1979, when gold just started it’s bear phase. And S&P 500 was on it’s way to heaven.

But lets be honest here and compare these two from year that this comparison really makes sense. And that is from the year 1971.

Now lets do some realistic comparisons. I will add Dow Jones Industrial Average (DJIA) to gold and S&P 500.

So, in a year 1971 DJIA’s value was 839$, and today it is around 25.000$. That is approximately 2880% more.

S&P 500 started with 102$, but today’s value is around 2.800$. That is approximately 2645% more.

How about gold. It started with value of 35$/oz, and today it is valued around 1350$/oz. That is approximately 3757% more. How about that. And this is the price that is about 25% lower than in july of 2012 when it reached it’s peak. That is when the gain was 5150%.

It all depends on a time frame. Lets take last 30 years for instance. Gold gained 350%, DJIA incredible 1250%. It all changes if we take last 15 years. Gold gains 315%, but DJIA only 58%.

How about the future? Where will prices take us? There is almost nothing good said about stocks for the next few years.