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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (59632)	1/2/2010 7:27:26 PM
From: KyrosL	2 Recommendations Read Replies (2) \| Respond to of 217716

The price of gold was controlled for hundreds of years, since it was official money, until the early seventies. Using its price at the exact point it started to trade freely is rather contrived. Hardly anybody bought gold as an investment at that time. People started viewing it as an investment around the mid seventies. But regardless of when you start comparing, your calculations of gold performance versus the DJ or, better, S&P500 are completely wrong. You are forgetting that a substantial component of stock performance are the dividends. Try plugging in an average 2-5% per year in dividends (figure an average of 4%), reinvesting them every year, and see what you get. You will be surprised how much higher stock performance is with dividend reinvestment. I am sure you are aware that most of an average stock's performance comes from dividends. Here is the SP500 dividend history since 1960. pages.stern.nyu.edu My back of the envelope calculations indicate that you must multiply the final SP500 index level by at least 5-10, depending on how many decades you want to compare gold vs stocks. Also, while you are at it, take into account that gold's return is slightly negative due to storage and insurance costs.