Tags: gold | checking | account

Check This Out: Something That Beats Gold

By Dan Weil   |   Tuesday, 08 Dec 2009 08:05 AM

While gold has been on a tear during the past year, its long-term track record isn’t so impressive.

The precious metal recently soared to a new record above $1,200 an ounce.

But someone who bought gold when it reached a peak of $850 in January 1980 and held on since is looking at a paltry return of about 37 percent.

The average checking account with interest has returned at least 92 percent during that period, Bloomberg reports.

And the Standard & Poor’s 500 Index generated a gain of more than 22 times, assuming dividends were reinvested.

On an inflation-adjusted basis, gold has actually lost value over the last 30 years — to the tune of 79 percent.

“You give up a lot of return for the privilege of sleeping well at night,” James Paulsen, chief investment strategist at Wells Capital Management, told Bloomberg.

“If the world falls into an abyss, gold could be a store of value. There is some merit in that, but you can end up holding too much gold waiting for the world to end. From my experience, the world has not ended yet.”

Still, plenty of experts say inflation, a sagging dollar and the exploding U.S. debt burden will continue to send gold prices higher.

David Tice, bear market strategist at Federated Investors, predicts the metal will reach $3,000 in two years.

“Fear is going to be key. There will be a global currency disaster ahead,” he told CNBC.

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While gold has been on a tear during the past year, its long-term track record isn’t so impressive.The precious metal recently soared to a new record above $1,200 an ounce. But someone who bought gold when it reached a peak of $850 in January 1980 and held on since is...
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