Yeah... your friend's dad was a johnny-come-lately boob who should've bought in when it was < $40 in '70.
Hmmmmmm... looks like I have a dyslexic keyboard this morning...
"friend's dad" should be "dad's friend"
Darn... I almost made it for a full year without a single typo...
Now I'm gonna have to wait unti 2006 to try it again.
Year |
High |
Low |
Year |
High |
Low |
|
|
1972 |
70.00 |
44.00 |
1990 |
423.75 |
345.85 |
|
|
1973 |
126.00 |
64.00 |
1991 |
403.00 |
344.30 |
|
|
1974 |
195.00 |
117.00 |
1992 |
359.60 |
330.20 | |
|
1975 |
185.00 |
135.00 |
1993 |
406.70 |
326.10 | |
|
1976 |
142.00 |
102.00 |
1994 |
397.50 |
369.65 | |
|
1977 |
168.00 |
127.00 |
1995 |
396.95 |
372.40 | |
|
1978 |
243.65 |
165.70 |
1996 |
416.25 |
367.40 | |
|
1979 |
524.00 |
216.55 |
1997 |
367.80 |
283.00 | |
|
1980 |
850.00 |
474.00 |
1998 |
314.60 |
273.40 | |
|
1981 |
599.25 |
391.25 |
1999 |
323.50 |
252.80 |
|
|
1982 |
488.50 |
296.75 |
2000 |
325.50 |
264.10 |
|
|
1983 |
511.50 |
374.25 |
2001 |
291.45 |
256.65 |
|
|
1984 |
406.85 |
303.25 |
2002 | 342.75 | 277.75 | |
|
1985 |
340.90 |
284.25 |
2003 | 417.25 | 319.90 | |
|
1986 |
442.75 |
326.00 |
2004 |
454.20 | 375.00 | |
|
1987 |
502.75 |
390.00 |
||||
|
1988 |
485.30 |
389.05 |
||||
|
1989 |
417.15 |
358.50 |
||||
|
|
||||||
Exactly. Buying at the top of most markets generally doesn't work out too well. See: NASDAQ = 5400.
Dear Willie Green,
"Yeah... your friend's dad was a johnny-come-lately boob..."
The gentleman was actually a genius, as measured by IQ. But you're right, he was a boob, just the same.
"...who should've bought in when it was < $40 in '70."
Sure, and if he'd have had $10,000, he could have bought 250 ounces at the price. And today, it'd be worth a cool $130,000. Pretty darned good!! That's about a 7.5% nominal return! That's almost as good as the stock market, with dividends reinvested, over the last 35 years!
Or he could have bought, in 1970, the property on which my neighborhood was built, at about $10,000 per acre. If he'd have kept it undeveloped until now, it would be worth north of $200,000 per acre, now. By the way, if he'd have bought just about any old developable raw land in the Washington, DC region in 1970, today, it'd easily be worth 15 - 20 times what it was in 1970. That's even better!
Or, he could have bought $10,000 of Intel in 1971. That would have bought enough shares that, after taking into account all the splits over the years, he'd have around 500,000 shares. Intel's hovering around twenty-five bucks a share. That's about $12.5 million! Even better!!
And, of course, right now, we're looking at a 25-year high in the price of gold.
And of course, you're starting from a low point which was artifactual, in that the price you're starting with was as the gold standard regime was coming to an end, and the price of gold was permitted to fluctuate. So, you're measuring from an artificially low point to a market top (at least so far).
The point is, gold has been a volatile investment over the last 35 years, and volatility is not exactly consonant with "great store of value."
As an investment, it's pretty much a dud. As a store of value, it's pretty much so-so.
If you'd have bought gold in 1970, and sold in 1980, at the top, you'd have made a small fortune in less than ten years! If you held on to it past 1980, and then sold, say, around 2000, you'd have done okay, if not quite striking it rich. On the other hand, if you'd have bought in 1935 and sold in 2000, you'd have underperformed by far most every other type of investment class.
So, sure, if you bought at the right time and sold at the right time, gold could have made you rich.
But in 1970, I was 10 years old, thus I personally lacked the opportunity to get gold at $40 per ounce. On the other hand, I was 18 or 19 at the top of the market, and was told by folks to take the money that I'd saved (I had a tidy bank balance at the time) and invest in gold. After all, the Russians were in Afghanistan! We were having another oil crisis! Iran had our hostages! Inflation looked like it might give way to hyperinflation! Interest rates were well into double digits! Unemployment was high!
What in the world would ever stop the price of gold?!?!?
If gold is a STORE of value, then it shouldn't matter too much when I buy it or when I sell it. I should get back approximately what I put in. STORES of value are not things that swing wildly in price in the relatively short term.
sitetest
PS: I thought it was illegal in the United States to own gold bullion from FDR's time until Mr. Nixon took us off the gold standard.