Real Rolling Gold Returns Compared to Stocks 1928-2013

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An update of a previous post comparing the average compound rolling returns (adjusted for inflation) for both stocks and gold over 1, 5, 10, 15, 20, 25, 30, 35 and 40 year intervals. 

For the period 1928-2013, the average annual compound real return of stocks = 6.3% and gold = 2.0%. However, the price of gold was controlled by the government until the mid-70s when the US finally abandoned the gold standard. For the period 1976-2013, the average returns were stocks = 7.2% and gold = 2.0%. 

Gold Data from MeasuringWorth. Stock data from Damodaran Online | Updated Data | Historical Returns on Stock Bonds and Bills - United States.  CPI from Measuring Worth. 

Graphs created in OmniGraphSketcher then pasted into Illustrator. 

Real Price of Gold since 1791–2013

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The price of gold has been dropping, so, by request, here is an updated version of my gold graph from last year. Here is the original post.

Real Rolling Gold Returns compared to Stocks

Updated to 2013

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Previously, I posted historical gold prices back to 1791 and annual gold returns before inflation. In this post, I am comparing the average compound rolling returns (adjusted for inflation) for both stocks and gold over 1, 5, 10, 15, 20, 25, 30, 35 and 40 year intervals. 

For the period 1928-2012, the average annual compound real return of stocks = 6.0% and gold = 2.2%. However, the price of gold was controlled by the government until the mid-70s when the US finally abandoned the gold standard. For the period 1976-2012, the average returns were stocks = 6.7% and gold = 2.5%. 

Gold Data from MeasuringWorth. Stock data from Damodaran Online | Updated Data | Historical Returns on Stock Bonds and Bills - United States.  CPI from Measuring Worth. 

Graphs created in OmniGraphSketcher then pasted into Illustrator. 

Return on Gold, Stocks, Bonds, and Bills since 1928

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How risky is gold compared to other assets? For most of the of the United States' history  gold's price was set by the government (given that the value of the US dollar was often pegged to gold). In this graphic, I have taken the annual price change of gold back to 1928 and compared it to the returns on stock, bonds and t-bills.

Since the early 1970s when the US completely abandoned the gold standard, gold's price changes has made it very volatile and if we look at the annualized compound return from 1976-2012 (gold 6.6%;  stocks 10.9%;  10-year bonds 8.1%;  3-month t-bills 5.1%). Gold returns was just little better than 3-month t-bills. However if we look at the annualized return for 1928-2012: gold's return of 5.3% beats t-bills at 3.6% and bonds at 5.1% but still underpreforms stock's return of 9.3%.

Gold Data from MeasuringWorth.org. Stock and treasury bonds data from Damodaran Online | Updated Data | Historical Returns on Stock Bonds and Bills - United States. CPI from Measuring Worth. 

Graphs created in OmniGraphSketcher then pasted into Illustrator. 

The Real Price of Gold since 1791

Check out the updated graph here

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In 2008, I graphed the annual US price of gold. In this post, I revisit gold but this time I graphed the market price along with the real price (adjusted for inflation using 2012 dollars). When you take the inflation into account, the annual price of gold has spiked over $1,700 twice since the US left the gold standard, once in 1980 and again in 2012.

In this graphic, I briefly touch upon the history of gold standard. Beginning in 1792, the US Mint pegged the dollar to gold and silver. In 1900 the US went on the gold standard (i.e. the dollar was pegged just to gold). During this time, except for monetary crisises, the market price for gold matched the "official" price set by the US government. In the 1970s, the US finally left the gold standard and allowed the dollar to float freely on international currency markets.

Data from MeasuringWorth.org . Graphs created in OmniGraphSketcher then pasted into Illustrator.