It is supposed to act as a safety net when markets are in decline, since the price of gold does not usually move with market prices. Gold is one of those investments that attracts extreme points of view and ideological arguments that favor narratives over substance. So, in the long run, stocks appear to outperform gold by about 3 to 1, but over shorter time horizons, gold can win. When evaluating the performance of gold as a long-term investment, it really depends on the time period being analyzed.
I will certainly look for arguments, but I don't think gold has anything to do with inflation, or with the dollar (although there is some short-term correlation between the dollar and gold), with deficits, or with the fact that the Moon is in the seventh house. But it's unlikely that many people have actually participated in this increase unless they have physical gold. One of the reasons is that gold is not an asset that generates revenues or represents the growth of a particular company or sector. GC00 gold, at +0.27%, was the best-performing asset class, with an annualized return of 8.8% over the past 20 years.
This is the only thing I am sure of, after taking a look at the history of the price of gold, that it is extremely volatile and cyclical. Gold is not an infallible investment, as is the case with stocks and bonds, its price fluctuates depending on a multitude of factors in the global economy. To get a historical perspective on gold prices, between January 1934, with the introduction of the Gold Reserve Act, and August 1971, when President Richard Nixon shut down the United States. It's rare to find a simple historical description of the yellow metal that doesn't involve highly politicized or biased points of view, so I thought I'd take a look at the history of gold's performance as an investment over the years.
The dollars and, in fact, made investing in gold extremely difficult, if not impossible and useless, for those who managed to accumulate or hide quantities of the precious metal. In all investment portfolios, diversification is important, and investing in gold can help diversify a portfolio, usually in the event of market crashes, when the price of gold tends to rise. I've seen some strong arguments in favor of a relationship between gold and real interest rates, but those are the kinds of things that can come and go as they please. From that point on, for the next 20 years or so, the price of gold fell by more than 70% until it finally bottomed out in late 1999.
