Gold is often referred as a “safe haven” during an economical / financial crysis. Well, these opinions have proven more or less wrong according to long term / 10 year charts because gold’s price has shown quite high volatility. On the other hand gold’s price did not change as extremely as silver’s price.
(Differences between gold and silver are highlighted in the 5 year gold-silver comparison charts.)
Gold’s 10 year history covers the entire financial crysis and 1-2 year preceeding it. Today it is at cca. 700 $ below its peak (1900 vs 1200) Actually its price seems to stay around 1200 for the past year.
The unit of gold above is 1 oz / 1 troy ounce = 31.10348 g (Troy ounce = 1/12 troy pound. Its a measure of precious metals.). (Prices are in US dollars)
People often say that long term investments carry less risk than short term ones. Is this true for gold in the past 10 years?
- Price has grown from cca. $700 to cca. $1300 throughout the past 10 years which equals 6.4% annual profit.
- 5 year yield curve spends the majority of time on the positive domain.
- 3 year yield curve seems more volatile than the 5 year one.
- both 3 and 5 year yield curves started to fall in the past 1-2 years just like gold’s price.
What can you see on the chart?
You can calculate gold’s 1 month return from gold’s price today and gold’s price 30 days ago. You can also do the same calculation for yesterday and gold’s price 31 days ago etc. If you do this calculation for each days, you will get a curve of gold’s 1 month yield. The same applies to other yield periods from three months to five ears.
This chart shows each yield curve in the past 10 years. It helps you to highlight how stable profits were.
Treshold marked with red shows 0% return.
This chart shows gold’s relative change against the US customer price index in the past 10 years.
There was only a very short period when gold has been underperforming the US customer price index.
*charts have been created by using Chartoasis Sesame. If you feel like analyzing gold’s historical prices, you can do that for free at www.chartoasis.com/sesame . You can download gold’s historical data using this step-by-step guide.