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Is Gold A Good Investment?

Is Gold a Good Long-Term Investment?

March 27, 2024716 view(s)

Gold was up 1% for the week to $2,210, record territory for gold.  Silver was also up 1% to $25.50, while platinum was 3% lower at $925, and palladium 4% lower at $1,065.

 

From a year ago today, gold and silver are both up 14%, with platinum down 6%, and palladium down 25%.

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Working in different sectors of the financial industry allows me to hear pitches from each sector about why to invest in each one.  For the last year or two, those promoting stocks have said “…don’t invest in gold - it has only averaged 4% per year for 10 years”, or something to that effect.  

 

The opposite is actually true.  Because gold’s long-term average (over 20 or 50 years) is between 8-8.5% per year, 10 years averaging only 4% means the next 10 years gold is likely to outperform.  It will take 10 years of 12% returns for gold, just to get back to the long-term average of 8%.  

 

Conversely, the stock market has performed better than average for 10 years, meaning it is due for 10 years of underperformance, just to get back to long-term averages.

 

The “Law of Averages” provides us with another reason why gold is now likely a good long-term investment.


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