Gold (for diversification and balance)

DiggerUK

thegentleway.....This compares Dow Jones Industrial Average vs gold for last 100 years

https://www.macrotrends.net/2608/gold-price-vs-stock-market-100-year-chart

This chart is also flawed. The calculations from your amended first chart are also flawed.
This new chart shows gold gaining 150% in 20 years, yet my figures show a rise of 750%, which is larger than the claimed 600% for the DJIA in your attached link.
Third time lucky?..._

bowlhead99

DiggerUK said:

thegentleway.....This compares Dow Jones Industrial Average vs gold for last 100 years

https://www.macrotrends.net/2608/gold-price-vs-stock-market-100-year-chart

This chart is also flawed. The calculations from your amended first chart are also flawed.
This new chart shows gold gaining 150% in 20 years, yet my figures show a rise of 750%, which is larger than the claimed 600% for the DJIA in your attached link.
Third time lucky?..._

You're just reading the 20 year chart wrong as the larger figure (619%) is for gold rather than for DJIA (143%).

Presumably the discrepancy between the 619% and your 750% is just that dollars became more valuable in pounds and so a sterling investor's return on gold would be greater than a dollar investor's return on gold ; likewise, a sterling investor's return on the Dow over the same timeframe would be greater than a dollar investor's return on the Dow, by the same fraction.

thegentleway

DiggerUK said:

This chart is also flawed. The calculations from your amended first chart are also flawed.
This new chart shows gold gaining 150% in 20 years, yet my figures show a rise of 750%, which is larger than the claimed 600% for the DJIA in your attached link.
Third time lucky?..._

They're not my calculations... I've just linked a couple of website that allow people to compare historical performance. Feel free to contact those website and share your figures with them. I've got no dog in this fight (or gold in my portfolio ). I think the conventional wisdom is not to put all your eggs in one basket but having some gold in a defensive portfolio doesn't seem to be a bad idea (Ray Dalio all weather/golden butterfly). Hope it continues to work out great for you.

DiggerUK

bowlhead99, are you serious, I just assumed the poster was using the chart to say DJIA rules, and gold sucks. I really did get that wrong.
I originally responded to the first post by doing the calculations in pounds, I missed that the chart was in USD$. Hence why I edited the post.

Those figures showed that £10k turned in to £85,440 today and would have been £63,490 at start of year.
The USD/GBP FX will have been all over the shop in 20 years..._ 
Click on tables for ease of use

Edit, I just clicked the five year chart which shows the cross over. The DJIA is one of a handful of bourses around the world that is above were it was five years ago..._

DiggerUK

gentleway, it's rules number one to a thousand and one of due diligence, check your sources.
To make such an error on this forum is a bad example to set for newbies and lurkers. You get points for a mea culpa though..._

thegentleway

DiggerUK said:

gentleway, it's rules number one to a thousand and one of due diligence, check your sources.
To make such an error on this forum is a bad example to set for newbies and lurkers. You get points for a mea culpa though..._

awesome, can I buy some gold with the points ?

bowlhead99

DiggerUK said:

bowlhead99, are you serious, I just assumed the poster was using the chart to say DJIA rules, and gold sucks. I really did get that wrong.
I originally responded to the first post by doing the calculations in pounds, I missed that the chart was in USD$. Hence why I edited the post.

Those figures showed that £10k turned in to £85,440 today and would have been £63,490 at start of year.

Am I serious? Well, I wasn't joking, simply telling you what the charts say - the 'second time lucky' link that thegentleway provided seems to be a reasonable source, just isn't in pounds, but as both of the things being measured are being plotted in the same currency it doesn't matter too much. 

Seems a fair observation that the Dow (one of the few indexes to have been running for a century) has well outperformed gold in the 105 years covered by the data (47000% vs 10000%), which is not too surprising, given it represents ownership of some of the productive economic engines of capitalism while gold was simply a currency and then a reserve / speculative asset. Dow has also outperformed gold over the last decade (170% vs 60% when measured in the same currency). 

You can see from the link that someone fortunate enough to be diving in as you did, in the second-to-last decade of that 105 year period, will have enjoyed their money going up to 4.5x its starting position for that ten-years while the Dow was flattish. Despite it plummetting again shortly afterwards, overall the last 20 years of the chart would show gold well ahead of the Dow. One might say the stocks investors could 'afford' that quiet decade, given they had already received a ~179x return over the previous 85 years while the gold investors merely had 13x.

Of course, cherry picking dates can help people prove pretty much anything without much context.  I don't think anyone is denying that investing in gold rather than equities in 2000 was a useful thing to have done, given what happened over the subsequent decade when gold instead of equities took a turn to rise to an unsustainable peak. If you already have sufficient wealth and are just happy to hold something without a real-terms growth expectation with the intention of limiting the downside somewhat, it can be useful as part of a diversified portfolio, because it is clearly going up and down at different times than equities. So it's not too surprising that OP is considering adding some, if that sort of thing fits with the objectives.  The timing of the entry point will determine what returns they get, so If investing with hindsight were something possible to do, the investing game would naturally be easier.

Sailtheworld

coachman12 said:

Do any of the expert posters above, especially Sailtheworld,( but excluding DiggerUK) have stocks of gold in any form, have they ever had any, have they ever seen a box of gold bars or a collection of gold coin ? Do any posters have Swiss Bank Accounts, a deposit box, a personal manager ?
I can't help it that I do happen to have such things. I keep fine paintings too. Sorry, sorry, sorry.
Seems to be a "tiny hint" of jealousy creeping in to some of the posts ?? Sorry, but it's not my fault.

Apology accepted. Can you stop waving it now?

DiggerUK

bowlhead99,  "If you already have sufficient wealth and are just happy to hold something without any real term growth expectations and  with the intention of removing the downside"
Just about sums up Digger Mansions..._

coachman12

DiggerUK said:

bowlhead99,  "If you already have sufficient wealth and are just happy to hold something without any real term growth expectations and  with the intention of removing the downside"
Just about sums up Digger Mansions..._

Same here----and why should we not have the right to say so?