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.

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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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