# Gold As an Investment.

**URL:** <https://boards.straightdope.com/t/gold-as-an-investment/655312>\
**Category:** Great Debates\
**Created:** [April 10, 2013, 11:12am UTC](https://boards.straightdope.com/t/gold-as-an-investment/655312 "2013-04-10T11:12:39Z")\
**Posts on this page:** 1\
**Showing post:** 41

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**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\
**Post date:** [April 14, 2013, 8:17pm UTC](https://boards.straightdope.com/t/gold-as-an-investment/655312/41 "2013-04-14T20:17:50Z")

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I quote myself:

> [@Is there a GQ response to the right wing marketing of gold?](https://boards.straightdope.com/t/is-there-a-gq-response-to-the-right-wing-marketing-of-gold/517433/31):
>
> Let’s do the comparison. One dollar invested in the S&P 500 in January 1, 1978 would be worth $24.60 in Dec 31, 2008. [Cite](http://www.moneychimp.com/features/market_cagr.htm). Note that I picked an endpoint during one of the worst bear markets of the post-war era.
> 
> An oz of gold was worth about $170 on Jan 1, 1978 and $875 at the end of 2008, coming off of the worst post-war financial crisis when gold should be worth zillions. Dividing, $1 of gold bought in the beginning translates to $5.14 now.
> 
> 5.14 \<\< 24.60.
> 
> ## Hey, gold might be a terrific investment going forward. But it sure has been a dud in the past.
> 
> **What do baseball cards, art and gold have in common? They’re _really really_ cool**  
> I would expect gold to have lower returns over the long run. Like art, people like to hold the shiny metal, while investing in x share in Big Corp is boring. So they have to pay a premium for it, translating into lower returns. Add in conspiracy fantasies and gold’s allure becomes overwhelming.

> [@Is there a GQ response to the right wing marketing of gold?](https://boards.straightdope.com/t/is-there-a-gq-response-to-the-right-wing-marketing-of-gold/517433/37):
>
> As an investment, gold (or gold certificates) have a property that offsets its high volatility and low long-run returns. It might be negatively correlated with the stock market, such that it “zigs” when the stock market “zags”. In the technical parlance it may have a negative beta. (The paper below attacks this hypothesis, but it at least finds that gold is a near-zero beta asset.)
> 
> For those interested in investing in gold… I’d recommend other investments. But if you’re really really adamant, you should at least read about its properties from someone other than a salesman or political commentator, right? Here’s a link: !PDF! : deepblue.lib.umich.edu/bitstream/2027.42/63919/1/fei\_fan\_2009.pdf The author characterizes gold as just another foreign currency, albeit one that doesn’t pay interest.

The author also debunked the notion that gold is a particularly good hedge against inflation: it isn’t.

Previous threads:  
[Is there a GQ response to the right-wing marketing of gold?](http://boards.straightdope.com/sdmb/showthread.php?t=539805)  
[Why do ultra-right-wingers flip out over gold?](http://boards.straightdope.com/sdmb/showthread.php?t=539805)

I predict: One year after the Fed funds rate hits 3.75%, gold will be worth less than it is worth now ($1561 on April 11). (Also the Fed funds rate will hit 3.75% some time in the next 10 years, possibly as soon as late 2016 or more likely 2017.)

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