• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Epic Finances

Investment Blog Goal: 25% Return a Year

  • My Portfolio
  • Real Estate
  • About
  • Contact
  • Favorites

Gold is Still Arguably Cheap.

By Carmello on October 24, 2011

Gold is Still Arguably Cheap.

Lets do some more comparisons. Let say your ancestors invested in gold back in 1834 when gold was only worth $20.69 an ounce (177 years ago), what would you return be during those 177 years? 2.50% approximately.

Check the Math Yourself: 1.02498^177 * 20.69 = 1630.74 increase (Subtracting initial $20.69 cost)

So what is the take home message? Gold is very unpredictable, virtually entirely based off speculation that started mainly in the 1970s, and can stretch appreciation or depreciation across a decade or longer.

Gold has had an 11 year span with 1604% return, so maybe this current +433% return span has a little more kick in it after-all by comparison.

Maybe it’s not a bad investment because of these historical comparisons – let’s say gold has a 50/50 chance of getting another 400% return in the next 10 years or getting a –39% return in the next 10 years – wouldn’t you call that a decent investment? Just make sure not to invest too much in gold, diversification is key. If you did believed in those %’s and odds though and invested $1000 — the assess value of that investment would be ((50% * 1000 * 400%) + (50% * 1000 * 61%) = $2,305 (which would be an amazing assessed value and return on investment). Remember that physical gold is taxed at unfavorable rates though (As a collectible @ 28%)

There are a lot of arguments that could be made against those odds, that’s the fun part of risk/return – speculation. Maybe you think the odds are 80/20 or 10/90 – the only thing you can be certain of is anyone who says they know for certain is a liar or a criminal.

Does this mean there isn’t a bubble? Absolutely not, but gold might have substantially more room to inflate before adjusting/popping. 

Disclaimer: Always consult a financial professional for investment advice. All investments carry risk, be sure to properly assess your risks before investment.

Pages: Page 1 Page 2

Primary Sidebar

Archives

Article Categories

  • Amazon
  • Bonds
  • Butterfly Options
  • Cash Back
  • Ebay
  • ETF
  • Favorites
  • Gold
  • Guest Posts
  • Home Depot
  • Investing
  • Lowes
  • Options
  • Owning a Home
  • Personal Portfolio Update
  • Phone and Utilties
  • Product Reviews
  • Real Estate
  • Retirement Accounts
  • Saving Money
  • Silver
  • Stocks for the Long Run
  • Uncategorized

Copyright © 2023 · Smart Passive Income Pro on Genesis Framework · WordPress · Log in