Is gold such a wonderful long-term investment?
Gold price was fixed for more than 100 years at US $20.65 an ounce. Its price in 1932 was US $20.69 an ounce.
Based on a price of US $ 744.84 in 2007, the price has doubled 5.25 times in the past 75 years.
{The annual compounding rate using the rule of 72 is [(72/75) x 5.25] = 5.04 per cent (actual rate = 4.89 per cent per annum.)}
In real-money terms, the price of gold has barely kept pace with the rate of inflation. So there has been little real-money value capital appreciation in the value of gold over the past 75 years.
If you go back much further, its real-money value has deflated.
Why? Very little gold is consumed - once produced it remains in circulation as jewellery or bullion, so annual production continues to add to availability.
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
Wednesday 5 November 2008
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