Tuesday, November 18, 2014

Correct way to evaluate performance of Gold longer term

When you’re talking about the history of gold, of course, you start correctly in 1970, because you’re going back to before we basically went off the gold standard. If you really want to compare the performance of gold to other assets, you really need to go back to when we left the gold standard. 

Of course, all of the people who want to play down the role in the returns on gold, they never start in 1970. They start in 1980 to try to show what a bad investment gold was when they take [a look at] a peak.

What they really need to compare gold to is other currencies, like the dollar or the yen or the euro or pick a currency. 

If you want to compare gold to the dollar over extended periods of time and say, “If you were going to keep liquidity, if you didn’t want to buy assets for whatever reason – you wanted liquidity – where did you preserve your purchasing power?” Were you better off holding dollars in a bank account or burying gold in your backyard? 

You want to go back a hundred years, even probably with the interest that you could have earned on a bank deposit, you still have more purchasing power today just burying gold than depositing dollars in a bank. 

Of course, if you stuff those dollars under your mattress, compared to gold, you have lost almost everything.

Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009