Gold hitting new highs

The madness of crowds. Speculators see the price rise, get FOMO, buy gold, the prices rises, more FOMO, until the speculators run out of money and the price crashes. This happens regularly with gold.

For example, in March 2020 the price was an inflation-adjusted $2346. If you bought then, you’d still be down about -7.5% on your investment.

But it gets worse. Prior to that, the previous high was $2202 in July 2011. If you bought then, your investment return would be -6.1%

And its even worse than that! If you bought at the previous peak in January of 1980 at $2687, your return over the next 44 years would be -$19.1%. By contrast, the inflation-adjusted S&P 500 index with dividends reinvested is up 3281.79%.

Moral of the story is you should never, ever, ever, ever, ever buy gold near a peak. Right now is an absolutely horrible time to buy gold. If you own gold, you should be selling it as fast as humanly possible

Which brings me to this point:

Yes! Gold can be okay as trade if you time it right. But by the same token, the S&P 500 with dividends reinvested is up 540% over the same period. So even if you time it right gold isn’t that great.


I appreciate and agree with what you say apart from selling as fast as possible :slight_smile:

I also understand that there can be very big movements downwards with gold. Gold, silver and a few other precious metals make up about one-eight of my total wealth and, as this increases I drip more money into metals to keep the balance.

If anything I own (and I own quite a variety of assets) starts to show large price movements I just like to know why.

Gold has a few special attributes. There is a low counterparty risk and as J P Morgan said:

Gold is money, all the rest is credit