Is this still true? As a layperson looking at the chart, it seems like gold has moved up and down a lot, but is more or less in the same place as it was 2 years ago.
Is that true? JP Morgan and Deutche Bank have been caught manipulating the price, but it would probably need to be the Fed to keep it suppressed for as long as it has been. They certainly have the motive, but no one has proven that they are doing it.
Maybe gold and inflation are no longer as correlated as they used to be.
Or maybe they were never correlated and people just assumed they did and never bothered looking at the data:
* https://www.nber.org/papers/w18706
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789
I.e. if gold looks flat growth wise to the dollar, maybe it's cause it actually went up in value but the dollar went down due to inflation.
In 1970 a Carolla would have cost about 40oz of gold and today it would cost about 20oz. A barrel of crude was ⅒oz, today 1/20th oz.
It is not a good hedge against inflation:
* https://www.nber.org/papers/w18706
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789
From Roy Jastram's The Golden Constant: The English and American Experience 1560 to 1976:
> Andre Sharon, head of the international research department at Drexel Burnham, Inc., notes, “the value of gold essentially derives from its capacity to preserve real capital and purchasing power.”† I select this particular quotation because of the prestige of the organization and the position of the spokesman, but statements in this vein can be found in great numbers. They can be traced back for generations and in many countries. How can this proposition so contrary to statistical fact become so widely believed and quoted? Possibly because gold has preserved capital in cataclysmic cases it is easy to infer that it can be trusted to do the same in less severe circumstances. To extrapolate from gold’s protection in singular catastrophes to its use as a strategy against cyclical infation is an example of faulty inductive reasoning.
* PDF: http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram...
Weimar Deutschmarks, Venezuelan Bolivar, Mexican Pesos, Hungary, Zimbabwe, Yugoslavia, etc. etc. are a few examples in the last hundred years where it would have been better to hold gold than cash.
Are productive investments going to be more profitable than gold? Absolutely. Gold is not a productive asset and will not produce anything. That’s not what it’s for. It’s specifically for not investing over long periods where a fiat cash position would lose about ⅓ of its buying power per decade (in terms of current US Federal Reserve Notes).
Look at a chart of gold from 1970 to today and add a trend line from just the lows[0]. Even if you would have bought at the peak in 1980, the buying power of your gold would have been effectively unchanged (the dollar value would have tripled). At any other time, gold has handily beat cash.
Any financial consultant is absolutely going to steer you away from gold because it can’t make them recurring revenue. It’s always going to do worse than the stock market over the long term. That’s not what gold is for. It’s an alternative to a long term cash position.
I’m not saying put all money into gold, but having 1-10% of assets in physical gold is not any worse than most people’s much higher allocation in bonds.
0 - https://www.macrotrends.net/1333/historical-gold-prices-100-...