Gold vs Shares

Gold versus stock / share investment

It is very common – and indeed tempting – to compare the performance of gold bullion with those of market stocks. However, it should always be remembered that these are fundamentally different in terms of asset.

• Gold, or any precious metal, is a store of value, while stocks and share are a return on value (there’s an annual dividend as well as growth).

• Stocks and bonds are always subject to the economic and political climate with strong property rights and little turmoil.

Since the begining of the nineteeth century, stocks and bonds have gained value against gold due largely to stability of the American political scene. But it’s not straight line – long periods of stocks outperforming gold have been followed by significant periods of strength in gold.

Gold or Google

So which is/was the better investment? In late 2005, an ounce of gold and one share in Google were around the US$700 mark. However at the start of 2008, gold was around $860, while Google was holding around $650. Fears of recession since this date have only widened the gap.

But bear in mind, this can change – probably best to have a bit of both…