In contrast to stocks and bonds, the yield of gold is based solely on a rise in prices. In addition, investing in gold has unique costs. Furthermore, gold is not an income-generating asset. Since it is a physical asset, there are storage and insurance costs
.
And although gold is traditionally considered a safe investment, it can be highly volatile and fall in price. Over the same period, gold had a standard deviation of 5.38, compared to 1.15 for bonds and 4.34 for stocks. As these figures show, gold has a higher standard deviation than both bonds and stocks. The standard deviation of gold is 367.82% higher than that of bonds and 23.96% higher than the
standard deviation of stocks.
And stocks and bonds are generally considered better retirement savings, as they have outpaced gold’s price rise in the long term in the past. The first is the VanEck Vectors Gold Miners ETF, known as GDX, a security that tracks the overall performance of gold mining companies. Gold is not a foolproof investment. As with stocks and bonds, its price fluctuates depending on a variety of factors in the global economy. To determine whether gold is a safe investment that is good at keeping pace with inflation over various time horizons, I believe it is important to obtain empirical evidence of gold’s risk and return over
several decades.
To get a historical overview of the price of gold, investors generally turn to gold from January 1934 with the introduction of the Gold Reserve Act to August 1971, when President Richard Nixon shut down the US, when there is fear in the market and they expect stock prices to fall. For example, stocks have outperformed gold and bonds in certain periods of 30 years, but in around 15 years, gold has outperformed stocks and bonds.
