The long term, real return for gold is abysmal. When gold’s value goes up, it gets a lot of press and attention. Everyone is talking about it. We saw that back in 2011 when gold prices rose. But it’s since fallen quite a lot.Back in 1980, the price of gold went up to $850 an ounce. It got a lot of attention, fanfare, and news coverage.
But long term, gold doesn’t really go up that much. A study mentioned in the New York Times looked at the return of gold from 1836 to 2011. Once you factor in inflation, the long-term return on gold is just 1.1%.
To put that in comparison, treasury bills returned about 1%. Inflation-adjusted returns for long-term bonds were 2.9% over that time period, and stocks returned 7.4%.So in spite of the fanfare gold gets when prices skyrocket, the long-term returns – after inflation – are simply terrible.
Caveat Emptor. Inevitably gold will regress to its mean.
