Armageddon wrote:To everyone who says #gold is a bad investment: If you bought gold 10 years ago, you would have received 7% annualized return every year in CAD terms, says Kitco’s #PeterHug |
Citation? Showing his assumptions and work? Because this number (7% annual appreciation) makes NO sense to me given it looks like the US$ only appreciated roughly 7% vs. the Canadian dollar in the past ten years, and the figure, after inflation, is MUCH lower against the US$. (See below).
https://tradingeconomics.com/canada/currencyAlso, let's NOT pretend a 10 year snapshot is meaningful compared to looking at returns for nearly a century. Especially with volatile financial markets.
So gold is roughly $1300 now, in US dollars. (Rounding to nearest $100 -- just looking for a back-of-the-envelope picture here).
90 years ago, (going back to 1929, when good data generally became available for the biggest financial markets) gold was roughly $300 in US dollars -- inflation adjusted.
So the 90 year return was roughly (1300 - 300) / 300 = 1000 / 300 or 333 percent. So that's well under two doublings. So by the rule of 72, that's WAY under 2% return annually. Using 1.3% return would get us a doubling in 55+ years (72 / 1.3 = 55.4).
So 55 years for the first doubling, and then 35 years (to 90 years) to be 70% into the next doubling. 35 / 55 = 64%. So 1.3% is in the ballpark.
Somehow I think the stock market returns of roughly 7% after inflation, looking over 5 TIMES the return of gold for the past 90 years looks significantly better. https://www.macrotrends.net/1333/histor ... year-chartAnd why boost the gold returns by using Canadian dollars? Who cares about Canadian dollar purchasing power outside of Canada? For the US dollar, gold looked like $1127ish in Feb 2009, and $1316ish now. So that gives a 10 year return of (1316 - 1127) / 1127 = 16.8% in 10 years, so let's call in 1.7% annualized in USD terms, inflation adjusted.
And notice how this 10 year period you chose is in the ballpark of the longer term average for Gold's performance?
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Sanity checking, the rate of return formula I looked up is the same thing I used.
https://www.investopedia.com/terms/r/rateofreturn.aspI used Microsoft's CALC for all my figures.
If I messed up on the math (it's late, and I'm quite tired), please let me know.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.