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8 graphs on gold price movements (86 years data)

January 25, 2012 94 comments

Today I want to show you some patterns of gold prices from last few decades. There is no interpretation or conclusion but some findings and observations on gold price fluctuations in India. From last 10 yrs gold has been on a bull run and prices have multiplied many folds. In the last couple of weeks, gold prices have been extremely volatile and some analysts also predict that gold price upside movement is in threat. So I found gold prices for last 86 yrs (1925 2011) and did some number crunching and some graphs from which we get some interesting findings.

4 yrs Price difference (absolute returns

I found out the price difference for every 4 yrs period i.e. from 1928 to 1925 (yrs) and saw what exactly was the difference in the prices, then 1929 1926 and so on till 2007-2011. Just to give you an idea, gold price in 2008 was 12,500 and in 2011 it was 26,400; so the price difference was 111.20%. I used these data to plot a running 4 yrs price difference so at any point of time you can see how much was the return in those 4 yrs prior to that point. Note that this change in absolute in difference. The major point to note is that majority people think that gold has performed outstanding post 2000 in a time frame of 4 yrs. But from the graph you can see that in 70s time the 4 yrs period return was much more than what investors saw in recent time.

8 yrs Absolute Price difference runnin

This one is just like above chart, but this time its 8 yrs price difference. We are trying to catch that was the price change in an 8 yrs period. So for example, price in year 1980 was Rs 1330, then after 8 yrs in 1987, the price was Rs 2570, which is a 93.23% So like this I calculated the price difference for all the 8 yrs period and graphed it. There are very less 8 yr holding period when the returns from gold was negative, that happened 50s and 60s and just 90s end.

4 yrs CAGR running

The next chart is the CAGR return chart for 4 yrs time frame and the graph is for running periods that means 1925-1928, 1926-1929 2008-2011. CAGR return is the main indicator of the performance of any instrument. If you look at the chart below you can see the ups and downs in gold performance and you can see how gold has performed in short run (4 yrs period) for a long time line. You can see that gold returns touched 20%-25% in 70s and even in recent time it has performed wonderfully which we all are aware of .

8 yrs CAGR running

Then you can see the graph below which shows CAGR return on 8 yr running period. The interesting a little obvious fact is that it hardly gave any negative return in any 8 yrs time frame, only during 50s and late 90s it has performed badly.

20 yrs CAGR running

The real test of gold comes from a very long term performance and if we see a 20 yrs CAGR return on rolling basis (1925 1944, 1926-1945 1992-2011), then you can see that most of the times the returns has been in the range of 5-10% and only in the 80s people got best return if they had bought it in 60s.

CAGR from 1926 (base year)

This chart is interesting; it calculates the CAGR return of GOLD from 1926 to all the years. I mean CAGR return from 1925- 1926, 1925-1927, 1925-1928 and then 1925-2011 So the base year is always 1925. This shows you what was the very long term CAGR return of gold considering it was bought in 1925. In a way this does not give us very strong conclusion, but still shows us some perspective.

CAGR from 1960 (base year)

This graph is same as above just that the base year taken was 1960 so considering gold was bought in 1960, the graph shows the CAGR return for different holding periods. You can see that apart from those who sold the gold in 80s realised the best CAGR return, but those who held it for long, still have the returns in range of below 10%.

CAGR from 1980 (base year)

The last chart I want to show is with base year of 1980, you can see that over the long term the returns have converged to 10% & only in the last 10 yrs you can see the returns again going up.

What are your conclusions based on these charts ? What do you think about gold movement from this point onwards ?

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{ 94 comments read them below or add one }

1Dharmesh January 25, 2012 at 9:12 am Hi Manish,

A very nice article as usual. You seem to have done a lot of homework for this. I think, the charts only suggest one thing, there is still some steam left in Gold at the current levels. I am bullish on gold. Moreover, I believe, one need to have atleast 810% gold in his portfolio; and any time is the right time to buy gold, as long as you buy it. -Dharmesh
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2Manish Dharmesh

Chauhan January 26, 2012 at 5:04 pm

Thats your call , i would persoanlly stay away from gold at current levels Manish
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3Reema January 25, 2012 at 9:53 am My conclusion is this: I should not shy away from selling some portion of gold when in need of cash for a goal/emergency. But the current mindset is to always sell equity first and keep the gold for generations till you are great grandparents. In other words, try to cultivate some love for your well performing funds, just like gold.
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4Manish Reema

Chauhan January 26, 2012 at 5:03 pm

Yea .. i agree to that view Manish

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5KISALAY January 25, 2012 at 10:01 am Dear Manish,

I very happy to get these article for gold.I also interested in investing in Gold but dont know which time is best for investment & in which mode.So, you can give any advice for it .I want also to maintain 10% in portfolio.
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6Manish Kisalay

Chauhan January 26, 2012 at 5:02 pm

You can invest in physical gold , gold bars , gold ETF Manish
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7R>Chandrasekaran January 25, 2012 at 10:27 am Dear Manish,

This is amazing!! So much of gold movement data is a wonderful treasure for a person who is really interested in investing gold. Great!!!

Once again thank you for all your information.(iam simply a reader) with Chandrasekaran
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Regards

8Manish

Chauhan January 26, 2012 at 5:01 pm

Thanks Chanrasekran
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9Sachin January 25, 2012 at 10:50 am thanks Manish, very nice info shared..
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10Rohit

Verma January 25, 2012 at 11:36 am

Dear Manish, Fantastic article. I appreciate your efforts in doing a thorough analysis of the gold prices over the decades. I need your expert advise whether is this the right time to buy gold ??
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11Manish Rohit

Chauhan January 26, 2012 at 4:58 pm

I cant advice on that .. Over the long term we have seen that gold returns are in range of 5-12% .. over a short term its only speculation Manish
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12Abhishek

Chanda January 25, 2012 at 11:44 am

Mind blowing analysisvery useful!

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13Jerry

Jose January 25, 2012 at 2:47 pm

Yes you done well. Thanks for the articles. last years it shows a jump in gold prices and it gives a doubt that there may a correction also in this year or coming year.
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14Manish Jerry

Chauhan January 26, 2012 at 4:52 pm

Yea but those kind of jumps keep happening , and you cant really take them as basis for decision like selling ..
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15TWINKLE January 25, 2012 at 3:00 pm

hi awesome blog.
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manish

16Manish Thanks
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Chauhan January 26, 2012 at 4:51 pm

17Hitesh January 25, 2012 at 3:30 pm Hi Manish, A very very infomative article. Hitesh
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18Manish

Chauhan January 26, 2012 at 4:45 pm

Good to know you liked it .. what are the key learnings you took ? Manish
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19Jitendra Hi Manish,

Solanki January 25, 2012 at 3:36 pm

Very nice information you have shared. I personally believe that one should expect a reasonable return of 9-10% when you are holding it for long term.In shorter term you can see the other side also and hence it is more of speculation. The problem is that seeing the short term performance, investor starts considering it for long term holding. The asset is good when you buy it for the real consumption but should not be looked as an investment product for higher returns.
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20Manish Yea Jitendra

Chauhan January 26, 2012 at 4:43 pm

Agree with your points .. Over a long term one should not expect a lot of REAL return from gold as investments Manish
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21Ketan

Tapar January 25, 2012 at 3:48 pm

My conclusion is that gold never give you long term return on your investment more than inflation rate. Manish, why dont you comper the return of gold against inflation so that it will give us clear picture of our investment in gold.
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22Manish Ketan

Chauhan January 26, 2012 at 4:39 pm

thats a good point .. I have no idea where to find the inflation data for very long term .. Any idea where can we find it ? Manish
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23Chintan Dear Manish, Indeed For the

Jariwala February 17, 2012 at 5:53 pm

article data, you can was have a great. look

the inflation

athttp://www.tradingeconomics.com/india/inflation-cpi. Chintan
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24Manish

Chauhan February 17, 2012 at 5:56 pm

But that does not allow to export the numbers in excel for FREE .
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25Chintan Dear Manish,

Jariwala March 28, 2012 at 4:39 pm

I will recommend to compare it with CPI ( Consumer Price Index ) instead of inflation. Have a look at this link,

http://www.rbi.org.in/Scripts/AnnualPublications.aspx?head=Handbook%20of%20 Statistics%20on%20Indian%20Economy OR Check, data.worldbank.org/indicator/FP.CPI.TOTL.ZG This data may prove useful for you, in this article & future ones.
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26Manish

Chauhan March 28, 2012 at 5:15 pm

Thanks for that data .. will look at it !

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27Chandrashekhar January 25, 2012 at 4:01 pm Thanks for giving the detailed graphic explanation.

We can see from the grapf that sinces 2001 till date the prices are rised steadily up to 2006 but afterwords increased considerably.

Why this has happened is it due to depriciation of Rupee or otherwise. Chandrashekhar

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28Manish Chandrashekhar

Chauhan January 26, 2012 at 4:33 pm

It depends on so many things .. its all about how stocks are doing and how different economies are doing because gold is considered as safe heaven and most of the people flock to gold when they cant decide on anything else Manish
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29Paresh January 25, 2012 at 4:16 pm One query,prices shown in first table are average for that year or picked for a particular date?Sorry if you have already mentioned it and I do not catch it.
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30Manish Paresh

Chauhan January 26, 2012 at 4:28 pm

THe prices must be average . I got this data from net , so it was not known
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31Paresh January 25, 2012 at 5:50 pm Just I forget to mention one more thing in above comment. It would have been better if analysis have done based on dollar terms than indian rupees.In 1980,after sharp spike,Gold prices in international markets were nearly halved afterwords which do not reflctet here.
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32Gazala January 25, 2012 at 6:49 pm Hi Manish, Do you suggest investing in gold 1gm per month as i have been doing it since 2009. I purchase hard gold. Planning to carry on for a long term investing this way. what do you suggest ?
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33Manish Gazala

Chauhan January 25, 2012 at 7:14 pm

No harm in investing in gold , it will keep your money diversified .. but make sure your expectations should not cross 10-12% in long run , anything extra than that will be bonus. The volatility in gold prices also one of the things you will have to live with . Manish

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34kc January 25, 2012 at 7:28 pm hi manish

nice information,from graphs my conclusion is in long term gold gives return around 910%,current trend would be, after slightly increase, decrease.wat do uthink
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35Manish KC

Chauhan January 25, 2012 at 7:34 pm

Yea .. thats the conclusion .. but thats a very long term returs , over a period of 10 yrs , you can see different kind of returns like 5% , 10% or even 15% .. So how much you get it dependent on timing .. given the bull run in last 10 yrs , I see next 10 yrs very normal , so not excited too much on gold for next 5-10 yrs Manish
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36Rakesh January 25, 2012 at 10:49 pm Manish, Very good analysis. I never understood Gold, so never invested in gold ETFs. Happy with gold in physical form. Rakesh
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37Manish Rakesh

Chauhan January 26, 2012 at 2:17 pm

Gold in physical form is good enough .. no need to invest in Gold ETF if you are not comfortable Manish
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38bemoneyaware January 26, 2012 at 4:02 am What a mind-boggling article! It reminds me of the quotes:

Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital. ~Aaron Levenstein and

I abhor averages. I like the individual case. A man may have six meals one day and none the next, making an average of three meals per day, but that is not a good way to live. ~Louis D. Brandeis

I am confused as to a) which base year should we take? b) What are the reasons that price of gold rose from 1968-1988? and again after 2002?
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39nandish January 26, 2012 at 11:08 am Kirti i loved what aaron levenstein said.
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40Manish Bemoneyaware Good quote

Chauhan January 26, 2012 at 1:41 pm

.. Gold prices saw huge movement in international markets during

70s .. which also moved the prices in India too .. while we cant pin point just one reason , its all about demand , supply , emotions, stock markets , overall world economy and then the cycles around business and economy .. its not easy to judge the price movement reasons like that What do you say ? Manish
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41Veerchand

Bothra January 26, 2012 at 8:11 pm

CAGR of 10% doubles the price in roughly 7 years. Gold has given a CAGR of 10% between a long period of 86 years, which is not a small return.

Without inflation data at hand, it looks like Gold has indeed kept pace with inflation in these 86 years.
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42Manish Veerchand

Chauhan January 28, 2012 at 12:23 pm

THe long term CAGR for gold from 1925 is around 8% , not 10% .. and yes gold is known to keep its purchasing power and keep pace with inflation
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43Ankur Manish,

Lakhia January 26, 2012 at 11:40 pm

I understand that Gold retains its purchasing power over a long period of time. This means that real, inflation adjusted, returns from Gold would be close to zero over a long period of time. Your data looks like it is confirming this theory. This also means that Gold should not be viewed as investment (something which gives good real return over a long period of time) but should be viewed as insurance (something which protects its purchasing power over a long period of time). Think of a country like Zimbabwe where inflaion was beyond control or a country like Pakistan where inflation is very high double digits since long time or a country like Libya which is in chaos and there is no sanctity of local currency. It is hard for any domestic asset like stocks or property to produce real returns when inflation is running at, say 20% plus level for many years. In times like this, Gold shines. Therefore, Gold should be bought on SIP basis to make it about 10% of networth, in my opinion, irrespective of its price. If, God forbid, India heads to Zimbabwe way or even remotely close to it, this 10% allocation to Gold can make difference of life & death, financially. If you think India can never be like Zimbabwe, I wish you good luck. We have just embarked on biggest welfare scheme in Indias history by making it constitutional right for 65% population to get food grains from Rs 1/- to Rs. 3/- per kg forever. (Please remember, this Rs. 1/- or Rs/ 3/- per kg price can not be changed anytime in future, inflation in food price notwithstanding). This will only lead to spiral of money printing

and high inflation over the years. We even do not know what else will come in future may be free healthcare to 65% of population? Basically what I mean to say is this in all financial planning, normally all focus is on domestic assets denominated in rupee. No one thinks of scenario of what if currency goes for a toss like Zimbabwe or Soviet union? I do not think financial planning is complete without safeguarding purchasing power of your networth against rackless political schemes. If India does well, your 90% of assets (other than Gold) would do well and you need not worry. If India goes to hell, your 10% allocation to Gold will feel like heaven.
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44Manish Ankur

Chauhan January 28, 2012 at 12:13 pm

Yea i agree to your points , where did I say that India can not go Zimbabwe way ? I agree to what you say .. but also look at how good the chances are for that in near future .. we can take those assumptions and plan things right now , I feel that would be being too cautious , dont you think so ?
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45Ankur Manish,

Lakhia January 28, 2012 at 1:29 pm

As I said, I consider Gold as an insurance for networth against unforseen kind of events, Black Swans so to speak. In another words, Gold is similar to networth as life insurance is to death. These events, be it huper-inflation or India Pakistan war or rapid rupee depreciation etc will always have very low probabilities in near future, just like my death is. However, as time to take out insurance is when you dont seem to need it, time to buy Gold is when you dont seem to need it. Besides, I am advocating not more than 10% as allocation to Gold. If the need for this insurance doe not arise then it is fantastic for remaining 90% allocation. It will not matter if 10% allocation to Gold returns only 5% in nominal terms beccause, in such cases, remaining 90% would have erpformed well.

Hence, I consider regular buying of Gold up to 10% of netwroth is low cost insurance for a lifetimes hard work and prudent financial decisions. What is your view regarding buying of Gold on SIP basis, to a limit of 10% of networth?
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46Manish

Chauhan January 29, 2012 at 2:43 pm

Yea .. i agree that upto 10% of allocation is something a common person should look at. However given todays times where gold movement heavily depends on emotional factors and economic situations where the volatilty can be high , a person who wants to speculate and is ready to take the risk of price movements can look for higher allocation also Manish
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47amit April 30, 2012 at 4:59 pm How companies apparently with good prospect are NOT really good and you stay away from them

http://amitkumarblog.wordpress.com/2011/12/26/dish-tv-india-analysis-brightfuture/ the above is perfect eg of ways in which ppl fool general public and even professionals investors into buying a hyped up stock rather than gold Here is some data for last 15 years on returns of gold , equity from morgan stanleyhttp://xa.yimg.com/kq/groups/6548896/1091899790/name/Morgan Gold Equity (Sensex) 13.2 % . 15 yrs 12.7 is a long period % pls.

But that is not just about a 0.5% difference in returns but how many times the prices of gold went down or crashed or were volatile (if you are MBA types taught in B-Schools that volatility is risk which is crap) .

Gold Volatility has been 12.8% and equities 40% . Almost all of gold volatility has been on the up while everyone remembers 2008 when sensex crashed almost 50% + within 6-8 months .

Some intelligent soul will say well you should have bought then . Oh yes had investing been so easy that people would have picked up sensex at 8000 in 2009 then most would have become warren buffet (or on way to become him) . How many have the guts and intelligence to see their stocks go down 60% from top tick to bottom tick n hold on ??? How many actually buy low and sell high ?? Gold on the other hand almost always keeps going up slowly n surely . MBA guys will say volatility as a measure or risk which is crap . Risk is permanent loss of capital over a extended time period of time . Gold has never done that . Equities do it so frequently that I better not go into that . And if someone is soo controlled that no matter what happens he will only invest in SENSEX and not use his brain (n easy earned money ) to start picking up stocks then of course he will make money more than gold . I mean most common investors will get into equity game only when sensex has gone up 30% + in last 1 yr or two and get sucked into buying individual stocks apart from MFs . Because nothing dulls anyones intelligence than easy money . Then people start to buy DLF , Unitech Lanco Punj LLyod etc who are touted by everybody on TV in 2007 for wonderful opportunities . Unfortunately the volatility there is not just volatility but its permanent loss of capital FOREVER . Understand difference . Any stock which goes down by 7080% NEVER recovers . And most purchases in bull market by normal people occur on these very stocks . But this is never case with gold .

Again I say if your emotionally strong that even after you have doubled your money by putting them in MF/Sensex in two years (aka 2005-07) and you refuse to start picking stocks yourself then you need NOT READ anything about investing anywhere . I bet less tha .99% ppl can resist temptation to pick up individual stocks The point I am trying to drill down is this so many guys are ready to fool you (read corporates , brokers) to give them the money because thats where their incentives lie .They wont get their bonus if they dont make you buy sell securities . Look at how MF sales have nose dived because commission has been reduced . WHy ?? Simple they were selling coz they will get commissions . If they sell you gold they wont .

Hence every single guy worth his MBA and excel sheet mentality will say here is next 10 yrs of cash flow of xyz company with value this and buy stock . But when it comes to gold they wlll say put only 10% into that . ??

Why

Coz it gave almost exactly equivalent results of equity over 15 years or 20 years with less than 1/3rd of volatility ??????

10% come again ??? Really only 10% to gold . ??

How many of guys writing posts here bought more in early 2009 than sell ??? I challenge anybody who says gold to be only 10% of portfolio to show their DEMAT account transactions as to whether they were buying or selling equities during dark days of 2008-09 ???? Most people do NOT understand that gold is a way to protect yourself from Govt printing of money . Gold has held its value over last 5000+ years of civilizations . Every single guy who has commented on this post has said same thing pls limit gold investment to 10%-15% of your investible amount . If you look at the above returns you see a 0.5% of difference in the returns of last 15 years . But then you say put only 10% of your networth in gold . Why ?? For all those guys who are jumping because some one said equities give fantastic inflation adjusted returns have a look at this

http://capitalmind.in/2012/04/chart-the-great-indian-stock-market-story-was-only5-good-years/ If you are good enough to enter in 2003 and exit in 2008 please send your resume You to buffett gold as . He a is looking for ??? investment and not managers investment . .

say

insurance

How many of you guys slept soundly in September -August 2008 ??? Unitech halved in less than 2 weeks . Did you held on to the 2nd largest real estate player ??? u r down 80+% .

Oh you were intelligent to put your money in ITC , HDFC n TCS . Great .. Put all your money in picking up those stocks n best of luck For other mortals dont say put only 10% in gold which has given equal returns to investors with not a day where you feel pressurized or no sleep at night because what some bloody americans did in their country and a crash in Sensex ensues.

Please say this put SIP in gold but you can put 33% each in Gold , MFs (strictly MFs n NO individual stock picking) and Bonds .

10 yrs from now if this blog remains I will be happy to eat my words. I am sure the intelligent mortals saying 10% gold in networth will still be saying that .
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48Rajiv January 27, 2012 at 7:41 am Hi Thanks for your good Manish, info.

Since 2004 I am regularly purchasing 1 gm gold in physical mode on each month.There are no lapses.Can I conti this for another 10 years?I have kept record of my all purchase.I dont want Gold in paper form.Thanks.
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49Manish Rajiv

Chauhan January 28, 2012 at 12:10 pm

Yea you can do that ..

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50Saurav Great

Sinha January 28, 2012 at 1:36 am

article as usual Manish .

But what if Gold meets the fate of Aluminium which, back in 1800s was considered a status symbol, costlier than Gold. Napoleon III, Emperor of France, is reputed to have given a banquet where the most honoured guests were given aluminium utensils, while the others made do with gold. But one gentleman from Russia found out the cheap process of refining Aluminium which is known as Bayer Process which led to a massive fall in the price & stature of this I fear if that happens to Gold, where will all the investors specially nations fall to?
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metal.

51Manish Saurav

Chauhan January 28, 2012 at 9:34 am

.. Its so low that I personally would not

What are the chances of that happening consider that to decide anything on gold Manish
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52K.M.Manohar Hi Manish,

Kumar January 28, 2012 at 12:49 pm

A considerable amount of research and data collection would have gone into computing the above figures and graphs. An excellent work that provides comprehensive data for gold lovers/investors. Personally, I have never been interested in gold. After looking at the figures you have provided, my guess is that gold prices will drop during 2012 and 2013. Depending on how much it drops, the end of 2013 and/or the beginning of 2014 may provide good buying opportunities. It is only a guess. Regards. Manohar.
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53Manish Manohar

Chauhan January 29, 2012 at 2:50 pm

Thanks for your appreciation.. Good to hear your views on gold in 2012 and 2013 , I slightly agree with it , but dont want to comment on price movements in short term at all Manish
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54Deepak

R Khemani January 28, 2012 at 9:13 pm

Manish there is a very interesting point to note over here which I think not many people including you have noticed. GOLD in 1979 was 937 and in 2011 was 26,400 roughly 26

times. The SENSEX in 1979 was 100 and in beginning of 2011 was around 20,000/= ie 200 times!
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55Manish Deepak

Chauhan January 29, 2012 at 2:31 pm

Yea i didnt look at that point , but its very known fact that over long term gold would have delivered just inflation linked return where as equity has given far better return . Manish
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56ashish January 29, 2012 at 5:22 pm golds shine is forever. we will see more increase in gold price if we see more debt problem in US.

Gold is the safest bet and can be purchased at current level 25-26k (for 22k gold)
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57Manish Ashish

Chauhan January 31, 2012 at 4:48 pm

what is your justification ?

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58Keerthi

Mukhi January 30, 2012 at 10:05 pm

Interested in your suggestion Manish San. Say if I have 200 gm of Gold Coins (100 gm bought in 2007 & 100 gm bought in 2010) , is it wise to sell it *now* and book profits? What is your opinion Manish?
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59Manish

Chauhan January 30, 2012 at 11:26 pm

Keerthi Wrong question .. the answer would only depend on how you think about it , not me .. I am not a great follower of gold and I believe in taking the profits out .. so I would sell. but you might not think like that and you should not be .. Take your own decisions . Manish
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60Banyan Hi

Financial Advisors January 31, 2012 at 6:03 pm

Manish,

I think you have provided a very valuable insight upon the movement of gold prices in past 4-8 decades. I think the primary reason behind the consistent movement in the gold prices has been a very limited stock of GOLD commodity on planet earth. It may surprise people, but a very common fact is that the total gold ever mined is 165000 tonnes out of which over 25% is owned / bought by India. To give it a perspective, the total global production for Iron in 2010 alone has been around 2,400,000,000 tonne (around 14500 times more than gold). The wealthier we all are becoming these days, the more will be the demand for Gold and hence it would push up the prices. Adding fuel to the fire is high liquidity in the hands of Investment Banks all across the world. Probably if I have free unlimited source of money, I shall continously buy Gold in large quantity (blaming uncertainity around the globe) this would push up the gold prices. I would then ask my Gold analyst as well to say that Gold is going to go higher and higher so that every one also jumps upon the frenzy to buy Gold. AND when the time is right, I shall slowly start exiting Gold and make a killing this would be slump of Gold for a couple of years atleast. Hence, though bullish on gold from a long term perspective, I tend to be a bit cautious as well considering what is happening in the global markets.
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61Manish

Chauhan February 2, 2012 at 4:30 pm

Thanks for your views on gold .

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62Pankaj February 1, 2012 at 1:47 am Hi Manish, Really appreciate your great efforts towards coming out with such wonderful graphs and data. You changed my views , I used to think Golds are really good for long term investment (At least thats what i have heard from many people)..But after seeing above data..i see better options..Special Thanks to Manish..:) Few Queries. 1). The CAGR has been mostly around 8 to 10% which is not so good enough to woe a investor (since inflation was nearly 7% in last 30 years or so) . Do you agree? 2). Rather One should invest in PPF if not in Equity SIP, bcoz PPF will give atleast 7% guaranteed (Though at present it is somewhere around 8.5%) ..Wats your views on the same..?????? In the above conditions , I have not considered disastrous situation like that of Zimbabwe (Inflation rate at 12530% :(:()
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63Manish

Chauhan February 2, 2012 at 3:38 pm

Yea from gold one shouod not expect more than 8-10% in long run (better to say inflation linked) .. So if you are investing in GOLD for growth of your money , I would say think again
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64B.Murali

Mohan February 1, 2012 at 6:00 pm

Thanks Manish for informing us the data in detail.

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65Anubhav February 2, 2012 at 8:54 am Hi Manish, Gold still is the safest investement considering the fact that most of the people around the world use/sell first:-

1. 2. 3. 4. 5. in case of need/urgency. World simply consider gold to be the safest among any Mutual Funds/other Fixed Then financial

Cash, Equities investment Deposits gold.

othe

commodity/equities/financial instrument. Your comparison for last 86 years though nice but doesnt looks decisive to me because this feeling of safety regarding gold has risen tremendously since last 10-15 years and is still increasing. Also Long term trend analysis is useful only if factors affecting same are constant, while in case of Gold we have seem paradigm changes in factors affecting gold. Thanks
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66Manish Yes Anubhav

Chauhan February 2, 2012 at 2:44 pm

I agree to your points .. The article never concluded anything . it was open data , thats all .. conclusions are on us to be made
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67Rajandran @Manish

R February 2, 2012 at 2:27 pm

Gold Historical Weekly Charts had turned to buy mode this week. And my ichimoku charts double confirms it. http://cdn.marketcalls.in/wp-content/uploads/2012/02/Gold-Weekly.png
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68Manish

Chauhan February 2, 2012 at 2:38 pm

Thats good to hear .. what are ichimoku charts ? And what is the time frame for this buy call ? It is short term like few weeks or longer
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69Rajandran

R February 2, 2012 at 3:12 pm

candle closes above the cloud with cloud as support

I normally use ichimoku charts to rate a chart as a buy/sell. The logic is very simple 1)Buy if the

2)Sell if the candle closes below the cloud with cloud as resistance After a long time Gold had closed above the cloud on weekly charts. And Ichimoku is mainly used for High Probability trading. And the Breakout on the weekly charts indicates a long term bullish trend with cloud supports coming around $1737(Dollar Terms). Current value of gold is $1756/Ounce
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70Manish

Chauhan February 2, 2012 at 3:24 pm

ok , its totally new to me actually .. will read it sometime

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71Rajandran

R February 2, 2012 at 3:52 pm

Ichimoku Trading system is little popular among my readers for low risk trading. Its a strategic tool rather than a forecasting tool.
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72Bharat February 14, 2012 at 5:36 pm Hi Manish, Thank you for a very insightful note, however : If u see these numbers for last 20 or 25 years ( dont think going back almost 90 years will help predict for next 90 ) in light of the following 2 points : - Gold Price Movement in Dollar Terms - Rupee Vs Dollar Movement These 2 charts will help us actually define the purchasing power that 2 paper money & 1 metal hold, because we in India grew at less than 3% for last part of last century, while Dollar ( the western currencies ) appreciated more in the same time, the gold price vs rupee seems depressed.

The case will be very very different if the Rupee was gaining against dollar ( high probability over the next 25 year )
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73Manish Bharat

Chauhan February 15, 2012 at 1:51 pm

Yes .. your points make sense .. however this article does not take that into consideration and there is no conclusion made in this article .. Manish
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74Nooresh

Merani February 15, 2012 at 1:24 am

Just got into this article as it had a mention of my view. Before looking at an investment in gold one should definitely look at this article by Warren Buffet

http://finance.fortune.cnn.com/2012/02/09/warren-buffett-berkshire-shareholder-letter/ Also one of the major co-relation of Gold is with currency which many of us might miss. So i would prefer looking at Gold in US dollars where i believe the returns is sub 5 % over the last 100 years. Gold may be a small part of the portfolio but dont consider it to be something which will provide consistent returns.

The only way it has given a good return is in ornamental use as it adds to the social element
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Like buffet says one ounce of gold will remain one ounce but as per

75Manish Nooresh

Chauhan February 15, 2012 at 11:21 am

Thanks for your views .. will look at that article !

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76Prakash February 15, 2012 at 11:00 pm

Really amazing information. Thanks and Great work

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77Manish Thanks Prakash

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Chauhan February 17, 2012 at 5:52 pm

78Ramanath February 17, 2012 at 12:12 pm Hi Manish, I had a query. Is it a good idea to go for (Existing) Gold Loan and buy more Gold for a 2 years span and sell it after 2 years to repay the loan amount? Any statistics that I can expect profit/loss in this approach? Thanks
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79Manish Ramanath

Chauhan February 17, 2012 at 4:19 pm

jagoinvestor.com/forum is a better place to discuss it

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80Manish

Sharma February 20, 2012 at 3:52 am

Very Good Article On Gold Price.

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81Mayank

Gupta March 29, 2012 at 9:08 am

Gold took 51 years to move from 100 to 18500 (Year 1959 to Year 2010) where as Sensex took 31 years (Year 1979 to Year 2010) to move from 100 to 18500. It doesnt mean gold have given half the return given by Sensex. The compounding effect can be much more. Mayank Gupta
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82Manish

Chauhan March 29, 2012 at 10:51 am

Yes Mayank , thats true not sure what conclusion you want to make at the end !
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83Mayank

Gupta March 29, 2012 at 11:13 am

I believe equities can perform much better in the long run as compared to gold looking at the past data when India was growing at a average pace of 4-6% and future prospects of India growing at a much faster pace. Mayank Gupta
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84Banyan Hi

Financial Advisors April 1, 2012 at 5:47 pm

Manish,

I think this article would very well complement with your gold price movements articles (http://insight.banyanfa.com/?p=363). I have tried to explain the reason behind the gold price movements and the possible way forward. My inspiration was one of the seminars held by a leading Investment bank where Head of Gold Trading of the biggest Investment Bank expressed his bullish views on Gold. Would really love to hear your views on the article. Regards BFA
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85Manish

Chauhan April 2, 2012 at 5:28 pm

Thanks . .will go through the article soon ! .

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86Banyan

Financial Advisors April 6, 2012 at 2:34 am

I would look forward for your views.

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87Arsh April 7, 2012 at 6:37 pm Was going through a similiar article on another website on gold and found the below comment from a gentlemen.I am naive in financial charts and returns so need you guys to look at his statistics and give your feedback.Its long so please be patient ========= http://xa.yimg.com/kq/groups/6548896/1091899790/name/Morgan%20stanley%20 Morgan Stanley report on CAGR over last 15 years for gold , equity , bonds and property . Gold Equities Bank FD 7.9% Crucially the most important thing is Volatility for Gold is just 12% while for Equities it is 40% . 15 year returns 13.2 12.7% %

HOw many strong souls are there which can see their MF go from 100000 to 50000 and stay put ??

Gold has had one way UP !!! Not a single down year in last 15 years . And to say that every person whom I have ever seen on TV has suggested to buy gold as just 10% to 15% of their portfolio only . ??? They would say it can work in practice that you make same amount of money buying gold with less than 1/3rd of volatility(read it as peace of mind) but it can never work in THEORY . Since I have spend 2 years doing MBA with excel sheets where i fancily project cash flows of companies whose names I did not know 2 months back for next 10 years hence I will keep doing that .

I cannot value gold as it does not give cash flow hence you should have it as 10% in portfolio even though I could open my eyes and look at the REAL returns made by people holding GOLD but I will just ignore it .

When looking at a straight up gold growth in RUPEE terms you said -Well why do not you look dollar terms returns and you know they are bad , it goes up and down . So I ask you why dont you show equity(sensex) returns in $ terms .

http://www.bseindia.com/whtsnew/dollex.asp Here I have made your job easier . Anyone who says sensex over 30 yr has given 17% CAGR in rupee terms needs to see what sensex in dollar terms . Guess what its a

meagre 8.5% return in $ terms but you will say hey put your money in equity only and not gold jewellery . Now I think you would know why Warren buffet does NOT put money in Indian stocks for a measly 8.5% nominal Dollar returns over 30 years . So much so for spectacular growth of Indian equities.

Gold is money and it has been same for thousands of years . As you can see govt cannot print gold as Indian govt has done over last 30 years . If you see 1 USD = 8 INR in around 1979 but today its about 51 but USD has actually lost almost 50% of its values against a basket of currency around the world .?? What does that mean ?? It means that Indian govt has printed so much of currency that its losing its value greatly . So how to protect yourself from that loss in value ?? Have gold physical gold . ====== Sorry for such a long copy-paste but just wanted to share this gentleman view with you guys Thanks, =============
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88Manish

Chauhan April 17, 2012 at 9:54 pm

Better discuss it on our forum : http://www.jagoinvestor.com/forum/

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89Nikunj May 26, 2012 at 11:02 am Please answer the comment#87, rather than skipping it.
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90Manish Nikunj

Chauhan May 26, 2012 at 11:09 am

The question is more of discussion type and it needs more than one person inputs , hence I suggested forum .
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91Manish April 29, 2012 at 11:40 pm Hi Excellent Information, very useful and informative as well. I have a small query to understand. Manish,

I want to invest in GOLD but trying to understand 2 things. 1) Should I invest in GOLD Jewellery or GOLD COINs, does it make difference (may be Jewellery is expensive than COIN) ? 2) Should I enroll for a Flexi Schemes (like Tanishq 11+1, where in 11 installment would be given by a buyer and 12th installment is given by Tanishq). or should buy in one go, does it make difference in Price of GOLD in one year.? Because then moment my flexi schemes get matured, of course the price of the GOLD would also increase. Please Regards,
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advice.

92Manish

Chauhan May 1, 2012 at 11:24 am

some discussion on the schemes like that

1. Jewelary will also have making charges . Coins will not 2. Here is

:http://www.jagoinvestor.com/forum/golden-harvest-scheme-ghs-fromtanishq/2903/
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93Manish May 1, 2012 at 1:04 pm Thank I have you a Small Manish, query,

If I buy GOLD COINs and not a Jewellery, CAN we convert GOLD COIN in to Jewellery. ?

I heard from somewhere that , GOLD COIN can not be converted in to Jewellery as they are of 24 C and Jewellery are made of 22 C or 18 C?

Please Thanks Again!

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confirm,

94Manish

Chauhan May 2, 2012 at 11:05 am

I am not sure of this , but i dont see any issue why you cant do that .. just go to jeweller and you can do it Manish
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