I'm making this post every year. I compare gold to the S&P 500.
I only compare to the S&P 500, because it's the most widely-cited measure of the stock market. If I used the Dow or NASDAQ, the results would be similar.
Once again, Gold crushed the S&P 500 in 2010. The S&P 500 had a gain of 14.42%, including reinvested dividends. Gold gained 23.81%, for a difference of 9.38%.
Over a period of several years, gold is outperforming the S&P 500 by nearly 1% per month!
Here are my results:
|Year||S&P 500||Gold||Gold/VFINX||Cum Dif||Ann Cum Diff|
I use usagold.com as my source for the price of gold. I take the value on the first trading day of January.
I use Yahoo finance as my source for the S&P 500. I use VFINX. I use the "adjusted close" column, so I'm including reinvested dividends. So, for 2011, it's the adjusted close on December 31, 2010.
"Cum diff" is the cumulative difference. "Ann cum diff" is the annualized difference. Since January 1, 2000, gold has outperformed the S&P 500 by nearly 1% per month!
You have to go all the way back to 1995, to find a time when a buy-and-hold S&P 500 investment would have outperformed a buy-and-hold gold investment.
On the Communism Channel, they ridicule gold at every opportunity. If there were a hedge fund with the same 15 year track record as gold, the fund manager would be on TV every day bragging about how super-awesome he was.
Here's the same information in chart form.
This one is in log scale. When viewing financial charts, log scale is more correct.
Pro-State trolls say "Gold has storage costs. Gold is useless. With stocks, you get a dividend." Yes, stocks do pay a dividend. The fallacy is that with a corporation, you're paying for all the waste and theft. The CEO acts like the owner, even though he isn't really the owner. Via the Principal-Agent problem, the CEO lines his pockets at the expense of shareholders.
A corporation has earnings. The cost of the waste and fraud and theft is greater than the value of the earnings.
A pro-State troll says "A clever person can outperform the S&P 500 index, by making good picks." Can you really outperform by 1% per month?
I was very disappointed, when I realized that the stock market is one big scam. It was like discovering Santa Claus doesn't exist.
It certainly is possible that the stock market will outperform gold for the next year or two. Over a period of 5+ years, I'm pretty sure gold will come out ahead.
There's a lot of State propaganda regarding gold. State comedians denigrate it at every opportunity. There are many regulations and taxes that make it difficult to own physical gold.