Dallin Blogs

Should you own Gold?

Written by Dallin Cutler | May 24, 2024 11:49:42 PM

Some love gold, others do not care for it. Some say you must own it, others seem impartial. Where should you fall?

 

Let us start with some data - gold returns

Gold's Return the last 51 years:

January 1971 - December 2022 7.78%

Gold Returns through the decades:

2010's 3.5%

2000's 14.3%

1990's -3.3%

1980's -2.4%

1970's 30.8%


THE RETURN OF GOLD EXCLUDING THE 1970's (43yr window)

Price of Gold on January 1980 $678 per ounce

Price of Gold on December 2022 $1,824 per ounce

That is a 2.3% return over 43 years.

Adjusted for inflation -0.8%


WHAT DID THE STOCK MARKET DO?

Let us look at the returns of the S&P 500 Index over those same time periods:

S&P 500 Index Return the last 51 years:

January 1971 - December 2022 10.6%

S&P 500 Index Returns through the decades:

2010's 13.6%

2000's -0.9% (the lost decade - diversification outside the S&P 500 Index might have helped here)

1990's 18.2%

1980's 17.5%

1970's 5.9%


The S&P 500 index return from 1980 to 2022 (same 43yr window)

January 1980 - December 2022 11.5%

Adjusted for inflation 8.1%

 

YOU MIGHT BE ACCUSING ME OF CHERRY PICKING...

I'm hurt but I'm ready to defend my honor.

When was the worst 43yr window of time for the S&P 500 Index?

1929 -1971

This window of time included the great depression.

It also included NINE negative calendar years from 1929 to 1941.... so 9 of the first 13 years were negative in this 43 year window.

So... what was the return? 8.4%

Adjusted for inflation 6.2%

 

THE WORST 30 YEAR WINDOW IN THE STOCK MARKET

Guess what the lowest return of ANY 30YR WINDOW of time going all the way back to 1926 in the S&P 500 Index is?

7.8% (this is an annualized return)

The TOTAL RETURN over this time period is 850%

To insure you did not miss that: The WORST 30yr return over the past roughly 100 years in the stock market is a total return of 850%

 

DOES GOLD PROTECT AGAINST INFLATION?

Inflation

Gold

Stock Market

2010's 1.8% / 3.5% / 13.6%

2000's 2.5% / 14.3% / -0.9%

1990's 2.9% / -3.3% / 18.2%

1980's 5.1% / -2.4% / 17.5%

1970's 7.4% / 30.8% / 5.9%

Gold did its job in the 1970's and 2000's, but does it always?

Don't forget about this piece of information I shared above:

The INFLATION ADJUSTED return of gold from January 1980 to December of 2022 was -0.8%

The INFLATION ADJUSTED return of the S&P 500 Index from January 1980 to December of 2022 was 8.1%

 

THE WORST YEARS IN THE STOCK MARKET VERSUS GOLD RETURNS

Here I am identifying all the worst years in the stock market going all the way back to 1970 and comparing those years, to gold's return that year. Don't the ads always say, "BUY GOLD!" when the stock market is falling?

The Worst Calendar Year Stock Market Returns

Gold Returns In Those Same Years

The Golden Years

1973 -14.7% / 65%

1974 -26.5% / 42%

1977 -7.2% / 21%

The Not So Golden Years

1981 -4.9% / -26%

1990 -3.1% / -7.8%

The 21st Century - A Mixed Bag Thus Far

2000 -9.1% / -4.6%

2001 -11.9% / 5.3%

2002 -22.1% / 17.7%

2008 -37% / -2.2%

2018 -4.4% / -4.5%

2022 -18.1% / 1.6%

 

MY TAKEAWAY FROM ALL THIS INFORMATION

I have an immaculate takeaway of the information presented here in my video above. To save you some time, jump to the 5:00 mark to hear it.

Sources & Disclosures found in the video link on Youtube