you juxtapose gold against modern world currencies, such as the U.S. dollar, the euro, the British pound, and the Japanese yen, you come away with some compelling points.
Figure 5-1 provides a snapshot of gold’s price performance since the beginning of this century (as of the first trading day in January 2000).
© John Wiley & Sons, Inc.
FIGURE 5-1: Gold’s price performance since the beginning of this century.
Gold began in early 2000 at a price of $288, and when you measure its performance with the price in mid-2020 (June 30, 2020) — $1,817.50 — you get a 531 percent total gain (sweet!). But how well did gold do against other conventional investment assets? Take a look in the following sections.
Gold versus the financial world in general
So how did gold stack up versus the titans of the financial world? See Table 5-1.
TABLE 5-1 Gold’s “Tale of the Tape”
| Asset | Price Jan. 2, 2000 | Price June 30, 2020 | Total Gain/Loss Dollar Amount $ | Total Gain/ Loss Percentage % |
|---|---|---|---|---|
| Gold | $288.05 | $1,817.50 | $1,529.45 | 530.97% |
| Silver | $5.29 | $18.58 | $13.29 | 251.22% |
| Dow Jones Industrial Average (stocks) | $11,501.85 | $25,812.88 | $14,311.03 | 124.42% |
| Nasdaq (Stocks) | $4,186.19 | $10,063.67 | $5,877.48 | 140.40% |
| S&P 500 (Stocks) | $1,455.22 | $3,100.29 | $1,645.07 | 113.05% |
| Average Savings acct* | $100 | $120.50 | $20.50 | 20.5% |
| Inflation** | $1.00 | $1.53 | $0.53 more | 53% |
* Assuming a savings account balance of $100 for comparison purposes.
** Inflation rate for the sake of comparison. What would $1.00 buy in January 2000, and what would it cost to buy that same item in June 2020? (source: www.bls.gov/data/inflation_calculator.htm)
Well, well, well. Table 5-1 speaks volumes about the past 20-plus years. How many people knew that gold — a dead rock — outpaced the stock market so dramatically?! Time to break it down:
Gold crushed it! Generating a gain of more than 530 percent is awesome — who would have thunk it? It beat everything by a country mile.
Our companion metal, silver, came in second place with a 251 percent gain — not too shabby! (Chapter 6 has the full scoop on silver.)
Next comes the primary stock indexes. Nasdaq came in at 140 percent, then the Dow Jones (DJIA) at 124 percent, with the S&P 500 index coming up at 113 percent.
The savings account is there for those folks too skittish at investing and playing the safe route. But safety often means that you settle for a much lower return. In this case, you’re getting an average of 1 percent per year, ending up with 20.5 percent. And it didn’t beat inflation.
Inflation — our yardstick and the nemesis of savers everywhere — was up 53 percent for the same time frame.
The amazing thing is that the general public barely noticed the blistering performance of gold (and silver, too) during that time frame. The question is, how high can gold go once the general public starts to participate?
Gold versus stocks versus currencies
You see in the prior section how gold was the 800-pound gorilla in the battle royale versus other mainstream investment vehicles, but it’s important to measure gold versus its primary competitors such as stocks and currencies. In this, you’re comparing “apples to apples.”
When you’re comparing gold to stocks, for example, I don’t advocate that you should be 100 percent in one or another. I could put on my “stock hat” and make a strong case for stocks in some economic conditions (such as the 1980s), and I could put on my “gold hat” and make the case that gold is superior in other conditions (such as 2020–2025).
