Zero return on gold? Really?

On September 27, 2019, from Louis M…. DDS, Louisiana, U.S.

Question:

Your article on gold has me very confused about a zero return on the precious metal of 0% since 1926 at which time the price was less than $21 US. The price today is just above $1500. Is this an error or ??

Monday Morning Millionaire Program Answer:

Thank you for your question Dr. M. I am certain that other Monday Morning Millionaire Program (15.5% annual return since 2012) members would like to see our answer.

The 117-year table below (used with permission) is from Credit Suisse, an authoritative source.

It shows the 117-year real return from gold to be just above half a percent per annum.

Another authoritative paper* states:

“Gold has been described as an inflation hedge, a “golden constant”, with a long-run real return of zero.”*

Gold prices have a history of wide fluctuations as the decade-by-decade table below shows.

For every investor who was able successfully to take advantage of these fluctuations, there was an investor who lost.

However, holding gold for a long time has historically provided inflation protection for savings.

That alone is a major achievement.

*Erb, Claude B. and Harvey, Campbell R., The Golden Dilemma (May 4, 2013). Financial Analysts Journal, vol. 69, no. 4 (July/August 2013) 10-42.. Available at SSRN: https://ssrn.com/abstract=2078535 or http://dx.doi.org/10.2139/ssrn.2078535

Please note that the Monday Morning Millionaire Program contains opinions only. It does not provide any investment advice or endorsements.

Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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