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re: Just dumped some cash and bought gold, good or bad?
Posted on 8/17/14 at 6:35 am to Iowa Golfer
Posted on 8/17/14 at 6:35 am to Iowa Golfer
I agree the numbers seem absurd, BUT
Future value of $1.00 in 200 years at 7% is $752,931. Siegal says stocks have returned 6.5-7% after inflation since 1802. So I know his number here is correct.
I don't know how he figured bonds, bills, but link to the book is here.
There are a number of commentaries on the book and here is a pretty good one.
In a chart, you can see the value of $1.00 in 1802 is only .07 today due to inflation meaning the increase in the dollar value of gold over time has basically only kept up with inflation.
Now I'm sure there are all sorts of issues which would have to be dealt with to really understand relevance of these numbers, such as the complete lack of inflation for the 1st 150 years in the test period to constant inflation the last 50 years, but I firmly believe that bond, bills, and gold (and non-income producing land for that matter) are exceptionally poor investments over time and every study I've looked at confirms this.
One can cherry pick many, many segments of the timeline to prove what they like of course, but I'm pretty sure the reality is that commodities cannot come close to keeping pace with stocks over the long term in producing investor returns.
Future value of $1.00 in 200 years at 7% is $752,931. Siegal says stocks have returned 6.5-7% after inflation since 1802. So I know his number here is correct.
I don't know how he figured bonds, bills, but link to the book is here.
There are a number of commentaries on the book and here is a pretty good one.
In a chart, you can see the value of $1.00 in 1802 is only .07 today due to inflation meaning the increase in the dollar value of gold over time has basically only kept up with inflation.
Now I'm sure there are all sorts of issues which would have to be dealt with to really understand relevance of these numbers, such as the complete lack of inflation for the 1st 150 years in the test period to constant inflation the last 50 years, but I firmly believe that bond, bills, and gold (and non-income producing land for that matter) are exceptionally poor investments over time and every study I've looked at confirms this.
One can cherry pick many, many segments of the timeline to prove what they like of course, but I'm pretty sure the reality is that commodities cannot come close to keeping pace with stocks over the long term in producing investor returns.
Posted on 8/17/14 at 12:12 pm to Ole War Skule
quote:
Future value of $1.00 in 200 years at 7% is $752,931. Siegal says stocks have returned 6.5-7% after inflation since 1802. So I know his number here is correct
Correct if you bought what stock? How exactly would you guaranty the average return? Mutual funds, spiders etc are a pretty new thing? How did stock holders in lamp oil and wagon makers do? Picking the winners 200+ years later is easy.
quote:
I don't know how he figured bonds
Same principle just as many people have lost as made money on bonds
quote:
bills
this may be correct
quote:
In a chart, you can see the value of $1.00 in 1802 is only .07 today due to inflation meaning the increase in the dollar value of gold over time has basically only kept up with inflation.
Gold traded at around 19.30 an ounce in 1802 a short while back it flirted with 1900.00, do your own math.
I am not trying to convince anyone to buy anything, but the truth is what it is.
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