Gold, Silver, Real Estate and Crypto

[Brett]

It is also interesting that the graph he repeatedly posts (I thought there was a rule against that here) ends in 2024. The numbers I have been posting and I keep updating to current are 2025 Year to Date. Notice the difference?

While our precious metals holdings are our secondary investment for diversification, our primary investment, residential rental real estate, is also doing better than the stock market. Our real estate appreciation has been roughly similar to precious metals plus rental income is now running at about 20% per year of the amount we invested in the properties.

LOL -- the graph actually extends into the 2025. Nothing special about the year 2024 ........ except ....... it's before the madness and mayhem !

Again ...(and again) ...

The important point is the S&P companies pay dividends each quarter and (hold indirectly) interest bearing investments and real estate so S&P index fund re-invested returns over time will far exceed gold or silver


.

https://www.macrotrends.net/2608/gold-price-vs-stock-market-100-year-chart

 

[Ralph Sir Edward]

all comparisons are before taxes
But that's why index funds are preferred

That's an illogical comparison. Let me explain.

Tax rate of 20% (random rate for convenience.)

Asset #1 spins off 5% a year taxable income. The income is reinvested. <However>, you have to pay taxes on that 5%, each year before reinvesting. So the amount left over, after taxes, is only 4%. You are compounding 4%, not 5%. It doesn't matter whether or not it comes from Dividends from stock, of from ETFs, or interest from bonds.

Asset #2 spins off no income. It's total gain is from asset appreciation. There is no tax on the appreciation until the asset is sold, and then once. So its growth is not subject to taxes, until sold.

Set up a spreadsheet and watch the results over time.

 

[Carolinian]

Our rental properties are doing better on both appreciation and income than stocks. As a diversification asset, gold lacks the counterparty risks that many other asset classes have and I am happy with an asset that has appreciated over 20% in three months.

As to stocks and bonds, there are a lot of risks out there such as governmental debt across many countries. Our own debt to GDP ratio is alarming and many European countries are worse. Ask Greece what that does to an economy and stock and bond markets when it starts to become unmanagable. Or Ireland, Spain, Portugal, and Italy about what happens if the contagion spreads. Cyprus is also a cautionary tale. If our debt gets us into trouble, there is nobody to bail us out. If you do not think our debt is a ticking time bomb, look at what is going on right now with the hedge funds and their basis carry trade blowing up. That has been called "picking up pennies in front of a steamroller" for years and now the steamroller is upon them. The Fed seems to be preparing to bail out the hedge funds, but there may be some pain from it.

If there is a blow up from debt in a country with a worse debt burden than ours, like France, the contagion could hit us as well given where our debt to GDP ratio has gone since the Greece debacle.

 

[Brett]

That's an illogical comparison. Let me explain.

Tax rate of 20% (random rate for convenience.)

Asset #1 spins off 5% a year taxable income. The income is reinvested. <However>, you have to pay taxes on that 5%, each year before reinvesting. So the amount left over, after taxes, is only 4%. You are compounding 4%, not 5%. It doesn't matter whether or not it comes from Dividends from stock, of from ETFs, or interest from bonds.

Asset #2 spins off no income. It's total gain is from asset appreciation. There is no tax on the appreciation until the asset is sold, and then once. So its growth is not subject to taxes, until sold.

Set up a spreadsheet and watch the results over time.

Go ahead and keep your gold and silver in your basement safe and I'll keep my Vanguard 500 and Schwab 1000 index funds and in 40 years
we will see which asset is truly "Big and Beautiful" (after taxes) - OK?

.

.

https://www.macrotrends.net/2608/gold-price-vs-stock-market-100-year-chart

 

[Carolinian]

I thought there was a rule on TUG about repetitively posting the same thing. Am I wrong? How many times has that chart been posted?

Year-to-date my gold and silver has performed a whole lot better than stocks. Gold has never fallen off a cliff in value the way stocks sometimes have in history.

 

[PigsDad]

I found this interesting to those who are worried about equities when they have "fallen off a cliff":

And another way to slice the data:

So after 100% of the worst 10 individual years for stocks, and equities investor has positive gains. Logically, these stats should calm down those who fear equity investments in times of turmoil (but we all know that many people are not think logically when making investment decisions).

It would be interesting to these same statistics when looking at other asset classes such as gold, etc.

Kurt

 

[Brett]

I thought there was a rule on TUG about repetitively posting the same thing. Am I wrong? How many times has that chart been posted?

Year-to-date my gold and silver has performed a whole lot better than stocks. Gold has never fallen off a cliff in value the way stocks sometimes have in history.

The point (my point) is investing is for the long term, say 40 years until retirement.
.
Even the OP (RIP) agrees stock investments (with dividends & total return) easily outperform gold or silver in the long term, just not on a daily/weekly or monthly basis.
Sure, times are crazy now and some people like gold but normalcy will come back. (hopefully)

.

.

 

[Ralph Sir Edward]

I found this interesting to those who are worried about equities when they have "fallen off a cliff":

View attachment 109069

And another way to slice the data:

View attachment 109070

So after 100% of the worst 10 years for stocks, and equities investor has positive gains. Logically, these stats should calm down those who fear equity investments in times of turmoil (but we all know that many people are not think logically when making investment decisions).

It would be interesting to these same statistics when looking at other asset classes such as gold, etc.

Kurt

It all depends on how you slice the data. Using the Dow Industrials as proxy, - how long did it take the Dow to recover the loss from the peak at 09/06/29? In nominal terms, not corrected for the inflation that occurred during the holding period?

Answer - 1954.

Yes, 25 years.

When you analyse market movements, you need to look at all the data, not just the slices that support your viewpoint.

 

[PigsDad]

It all depends on how you slice the data. Using the Dow Industrials as proxy, - how long did it take the Dow to recover the loss from the peak at 09/06/29? In nominal terms, not corrected for the inflation that occurred during the holding period?

Answer - 1954.

Yes, 25 years.

Not true. You only looked at the index value, not the total return that includes reinvested dividends. Plus, the Dow Industrials is such a narrow set of stocks; hardly representative of the greater equity market.

When you analyse market movements, you need to look at all the data, not just the slices that support your viewpoint.

Completely agree. Just like not including using the total return or a set of only 30 stocks when trying to support your viewpoint.

Kurt

 

[Ralph Sir Edward]

Not true. You only looked at the index value, not the total return that includes reinvested dividends. Plus, the Dow Industrials is such a narrow set of stocks; hardly representative of the greater equity market.


Completely agree. Just like not including using the total return or a set of only 30 stocks when trying to support your viewpoint.

Kurt

Kurt, Please review the data here. https://www.macrotrends.net/2324/sp-500-historical-chart-data

The Aug 1929 peak on the S&P 500 was 31.71. It didn't reach that amount until Oct 1954. As I pointed out to Brett, total return is based on the tax rate paid on dividends. Every year you get a dividend, you have to pay taxes on that income. Before you can reinvest that dividend. There was no IRAs, 401ks, ect. during this period. None! (Note - EFTs didn't even come into existence until 2002. I know! I wrote code to support them when i was a programmer for one of the big 3 settlement banks.) And the maximum tax rate was 91% during that period (although virtually no one paid that rate). Whatever rate you paid on dividends, and it varied from individual to individual, based on total income, you have to reduce the total return based on what was paid along the way. These detail get "swept under the rug" by people trying to make an investment look the best. I don't do that.

To get feel for how "bubble like" the current market is like, look at the 90 year chart, and turn off the log scale, but leave the inflation adjustment on. The post 2009 mania is larger than anything in modern history. the "dot-com" mania of the 1990s went from 1000 to 2600+. Call it 2.6 fold. The current post 2009 mania has gone from 1100 to 5700+, or roughly 5.2 times, which is twice as big as the "dot-com" bubble!

For real fun, turn off the inflation adjustment.

As to gold during this period (1929 to 1954), if you were willing to be a crook, and convert your money to gold in 1929, and stick it in a foreign (Canada?) safe deposit box, your money would have gone up in value by 69% by 1954 (gold at $20.67 was revalued to $35/oz. 35 - 20.67 = 14.33. 14.33 / 20.67 = .6932. QED) So did the total return (after tax on dividends) exceed 69% in 1954? Shrug. You tell me.

Investing has been a hobby for me since I was 17. I've studied it all. Stocks, Bonds, Options, Commodities, Metals, Collectibles, Real Estate, Intellectual Property, ect.

 

[PigsDad]

The Aug 1929 peak on the S&P 500 was 31.71. It didn't reach that amount until Oct 1954.

Again, that is a useless comparison. You are assuming a 100% tax on the dividends so that there is no reinvestment. Totally unrealistic. The individual's actual effective tax rate was a tiny fraction of that, so again, it was not until 1954 that an investor recovered.

As to gold during this period (1929 to 1954), if you were willing to be a crook, and convert your money to gold in 1929, and stick it in a foreign (Canada?) safe deposit box, your money would have gone up in value by 69% by 1954 (gold at $20.67 was revalued to $35/oz. 35 - 20.67 = 14.33. 14.33 / 20.67 = .6932. QED) So did the total return (after tax on dividends) exceed 69% in 1954? Shrug. You tell me.

And from 1954 to 1972, what was the change in the gold price? I'll give you a hint -- $0. Talk about cherry-picking to "prove" what a great investment gold is!

And as for inflation, that affects gold as well as equities, so no need to factor that in when simply trying to compare the two.

But you do you and just go on believing that gold is such a great long-term investment. I'll stick with equities for my portfolio growth. There's room in this world for all types of investors.

Kurt

 

[PigsDad]

Also just wanted to state that using the 1929 crash as a typical bear market example in 2025 is simply silly (including the chart I posted earlier today). The market is such a different beast vs. 94 years ago; it really has no bearing on investment decisions today.

Kurt

 

[Brett]

Kurt, Please review the data here. https://www.macrotrends.net/2324/sp-500-historical-chart-data

The Aug 1929 peak on the S&P 500 was 31.71. It didn't reach that amount until Oct 1954. As I pointed out to Brett, total return is based on the tax rate paid on dividends. Every year you get a dividend, you have to pay taxes on that income. Before you can reinvest that dividend. There was no IRAs, 401ks, ect. during this period. None! (Note - EFTs didn't even come into existence until 2002. I know! I wrote code to support them when i was a programmer for one of the big 3 settlement banks.) And the maximum tax rate was 91% during that period (although virtually no one paid that rate). Whatever rate you paid on dividends, and it varied from individual to individual, based on total income, you have to reduce the total return based on what was paid along the way. These detail get "swept under the rug" by people trying to make an investment look the best. I don't do that.

To get feel for how "bubble like" the current market is like, look at the 90 year chart, and turn off the log scale, but leave the inflation adjustment on. The post 2009 mania is larger than anything in modern history. the "dot-com" mania of the 1990s went from 1000 to 2600+. Call it 2.6 fold. The current post 2009 mania has gone from 1100 to 5700+, or roughly 5.2 times, which is twice as big as the "dot-com" bubble!

For real fun, turn off the inflation adjustment.

As to gold during this period (1929 to 1954), if you were willing to be a crook, and convert your money to gold in 1929, and stick it in a foreign (Canada?) safe deposit box, your money would have gone up in value by 69% by 1954 (gold at $20.67 was revalued to $35/oz. 35 - 20.67 = 14.33. 14.33 / 20.67 = .6932. QED) So did the total return (after tax on dividends) exceed 69% in 1954? Shrug. You tell me.

Investing has been a hobby for me since I was 17. I've studied it all. Stocks, Bonds, Options, Commodities, Metals, Collectibles, Real Estate, Intellectual Property, ect.

So investing is a "hobby" for you

Do you look at P/E ratios and analyze company financial data?
Have you taken a financial investment course at a college?
Are you relying on your investments for retirement income?

 

[Ralph Sir Edward]

So investing is a "hobby" for you

Do you look at P/E ratios and analyze company financial data?
Have you taken a financial investment course at a college?
Are you relying on your investments for retirement income?

#1. Sometimes. It depends on what I am investing for. I did a deep dive into Altria, for example, for long term investing. I picked it up with 10% dividend yield, which is steadily rising. Other times I read charts and other technical indicators. I save for recessions, when I can buy bargains.

#2. I had no time to waste on fluff in college. I was a pre-med (if that means anything to you), picking up a degree in micro/molecular biology (another hobby, it's a great time to be reading scientific papers in the field.) I became a computer programmer in the financial world (a short list - coding teller terminals, support for Fed Funds trading systems, creating physical check and credit cards, corporate planning support, M&A support, various form of life insurance programming, big 3 bank securities programming (lead technician for maintaining all the banks positions, real time DTCC settlement support, tax reporting support), heath insurance programming, and I was a Medicare programmer for 3 years).

#3. My investment income in retirement is for play money. My worldview has always been to substitute capital for cash flow, so my day-to-day cash needs are low (and more than covered by common fixed investments).

The person with the most toys does <not> win. I'm living a happy retirement, in a modest but nice house in a nice neighborhood, surrounded by roses, and taking the occasional vacation. I wanted to point out that there are other aspects to investing than you provide. Shrug. You're free to ignore me.

Oh yes, I study the history of investing. There is nothing new under the sun, and those who ignore history are condemned to repeat it. (The ones who do study history and least know what to cuss. . . )

 

[easyrider]

My worldview has always been to substitute capital for cash flow

Mine too. Cash flow is reliable even in a bad economy.

Bill

 

[Carolinian]

Dividends will, of course, vary by company. Many on these boards really do not have a 40 year time frame. At a certain stage in life the security of your investments is what matters most. Many look to things like annuities, but I have more confidence in gold as there are lots of pressures on the dollar, most related to our debt to GDP ratio. I also like the income produced by our rental residential real estate. I would love to pick up another house of two but the market we mostly bought in, which has an excellent rental demand, at one time had lots of foreclosures we could get deals on. Those have now all dried up. We have one historic house in another market we have been negotiating on, but the owner is back and forth about whether they want to sell it or give it to their daughter.

 

[Brett]

#1. Sometimes. It depends on what I am investing for. I did a deep dive into Altria, for example, for long term investing. I picked it up with 10% dividend yield, which is steadily rising. Other times I read charts and other technical indicators. I save for recessions, when I can buy bargains.

#2. I had no time to waste on fluff in college. I was a pre-med (if that means anything to you), picking up a degree in micro/molecular biology (another hobby, it's a great time to be reading scientific papers in the field.) I became a computer programmer in the financial world (a short list - coding teller terminals, support for Fed Funds trading systems, creating physical check and credit cards, corporate planning support, M&A support, various form of life insurance programming, big 3 bank securities programming (lead technician for maintaining all the banks positions, real time DTCC settlement support, tax reporting support), heath insurance programming, and I was a Medicare programmer for 3 years).

#3. My investment income in retirement is for play money. My worldview has always been to substitute capital for cash flow, so my day-to-day cash needs are low (and more than covered by common fixed investments).

The person with the most toys does <not> win. I'm living a happy retirement, in a modest but nice house in a nice neighborhood, surrounded by roses, and taking the occasional vacation. I wanted to point out that there are other aspects to investing than you provide. Shrug. You're free to ignore me.

Oh yes, I study the history of investing. There is nothing new under the sun, and those who ignore history are condemned to repeat it. (The ones who do study history and least know what to cuss. . . )

OK, thanks for responding - it's always good to look at financial fundamentals when evaluating stocks.

But I don't consider financial courses taken in college or high school a "waste on fluff" of time but I understand it's just different opinions.
I do rely on investments for retirement (along with my wife's investments). It's not "play money" for us as we don't have pensions or annuities other than social security.
Over 40 years we have accumulated quite a bit and like you live modestly in a nice house in a nice neighborhood with time and opportunity for travel.

and I strongly believe in this general investment philosophy https://www.bogleheads.org/wiki/Getting_started
.

 

[Ralph Sir Edward]

OK, thanks for responding - it's always good to look at financial fundamentals when evaluating stocks.

But I don't consider financial courses taken in college or high school a "waste on fluff" of time but I understand it's just different opinions.
I do rely on investments for retirement (along with my wife's investments). It's not "play money" for us as we don't have pensions or annuities other than social security.
Over 40 years we have accumulated quite a bit and like you live modestly in a nice house in a nice neighborhood with time and opportunity for travel.

and I strongly believe in this general investment philosophy https://www.bogleheads.org/wiki/Getting_started
.

All investing is making bets on the future. That boils down to trying to predict the future. Every prediction is going to be wrong to some extent, some more than others. I accept this.

In a more stable time, I follow J.P. Morgan Sr.'s methodology for getting rich. Ol' J.P. wouldn't buy (expand) during prosperities, he saved his profits instead, while everybody else cheerfully expanded in the good times. When bad times came (and eventually they always came), he took his savings and bought bargains with it, even borrowing more, if necessary. Then as thing turned around, he paid off any debt, and saved for the next bad time. He got very, very, rich with this methodology.

But these are not stable times, and my ability to predict is becoming very cloudy, indeed. The few things I can project are scary, so I tend to want to hunker down. Check with me in a year or two.

 

[Carolinian]

Gold just made another all time high this morning, up well over $3,300, and up over 26% YTD. Silver is up over 13% YTD. Are you stock market guys feeling the same love? I see Bitcon is DOWN over 11% YTD.

 

[PigsDad]

Gold just made another all time high this morning, up well over $3,300, and up over 26% YTD. Silver is up over 13% YTD. Are you stock market guys feeling the same love? I see Bitcon is DOWN over 11% YTD.

Who says us "stock guys" don't have some investments in precious metals? Stocks are on sale; they will be back, and in the meantime, they keep on paying me dividends (unlike gold). I'm fine with that.

Kurt

 

[Ralph Sir Edward]

Gold just made another all time high this morning, up well over $3,300, and up over 26% YTD. Silver is up over 13% YTD. Are you stock market guys feeling the same love? I see Bitcon is DOWN over 11% YTD.

This is the time to be wary of investing more in gold. From a chart sense, this is what is called a "fast rise". It is typical of a late stage commodity rally. They are usually followed by a 50% retracement. Think 1979. . .

 

[Carolinian]

Who says us "stock guys" don't have some investments in precious metals? Stocks are on sale; they will be back, and in the meantime, they keep on paying me dividends (unlike gold). I'm fine with that.

Kurt

Actually, a good way to play both is the gold and silver mining companies, but you have to look at geopolitical risk there on many of them.

 

[Carolinian]

This is the time to be wary of investing more in gold. From a chart sense, this is what is called a "fast rise". It is typical of a late stage commodity rally. They are usually followed by a 50% retracement. Think 1979. . .

If the rally was being driven by investors instead of central banks, I might agree with you. All the major investment banks are long gold and silver for their own books, which tells you a lot. Right now, I think silver has more percentage potential because 1) a few central banks are starting to acquire silver, which they traditionally have not done, 2) industrial demand for various electronic applications is increasing, and 3) mine supply has been less than demand for several years and the gap between them is growing. YMMV.

My concern is what a large increase means for the dollar and the economy because of what it says about the dollar and other fiat currencies. A significant part of why gold is rising is central banks dumping dollars for gold. Right now, debt to GDP ratios give concern about many fiat currencies around the world.

 

[emeryjre]

Gold just made another all time high this morning, up well over $3,300, and up over 26% YTD. Silver is up over 13% YTD. Are you stock market guys feeling the same love? I see Bitcon is DOWN over 11% YTD.

You ever heard about being short the market
How about people who have purchased portfolio protection

Gold is having its day in the sun
Congratulations to those who have gold for long periods of time with no price action to the upside and no dividends
Those people are finally getting some return on their investment

 

[emeryjre]

If the rally was being driven by investors instead of central banks, I might agree with you. All the major investment banks are long gold and silver for their own books, which tells you a lot. Right now, I think silver has more percentage potential because 1) a few central banks are starting to acquire silver, which they traditionally have not done, 2) industrial demand for various electronic applications is increasing, and 3) mine supply has been less than demand for several years and the gap between them is growing. YMMV.

My concern is what a large increase means for the dollar and the economy because of what it says about the dollar and other fiat currencies. A significant part of why gold is rising is central banks dumping dollars for gold. Right now, debt to GDP ratios give concern about many fiat currencies around the world.

And when it comes time to reorder the currency markets and reset exchange rates
Do you really think Gold Reserves will be the determining factor in the reset