The average American who invested in the stock market on January 2nd, A.D. 2008, lost 38% of his investment by December 31st, A.D. 2008. In other words, if you’d invested $10,000 in stocks at the beginning of A.D. 2008, by the end, your investment would be worth only $6,200.
On the other hand, while the ‘08 stock market fell by a dramatic 38%, the price of gold bullion on the spot market rose modestly by 2.9% from $856 per ounce to $881. In “normal” times, a 2.9% increase in price would be nothing to brag about. But compared to a 38% loss in ‘08 stocks, a 2.9% gain is almost amazing.
The “spread” between the stock market loss and the gold bullion gain was almost 41%. While the man who invested $10,000 in stocks wound up with $6,200, the man who invested $10,000 in gold bullion wound up with $10,290. That’s a difference of $4,090 on a $10,000 investment in just one year. That’s big.
And on the third hand (if there is such thing), Discount Gold & Silver compared the prices of several numismatic gold coins at the beginning and end of A.D. 2008. The coins compared and their changes in prices were:
$20 Liberty: XF (up 24.7%); MS61 (up 17.8%), MS62 (up 16.3%), and MS63 (up 22%)
$10 Liberty: MS61 (up 24.2%) and MS62 (up 26.4%)
St Gaudens $20: MS64 (up 17.4%) and MS65 (up 14.1%)
The greatest increase in prices for these numismatic coins was 26.4% for the MS62 $10 Liberty. The lowest increase was 14.1% for the MS65 St. Gaudens. The average increase for all of these coins was 19.6%.
Those who invested in stocks in ‘08 lost a shocking 38%. Those who invested in gold bullion gained a modest 2.9%. Those who invested in numismatic gold coins gained an astonishing 19.6%.
The “spread” between the loss in stocks and the gain in bullion was almost 41%. The “spread” between the gain in bullion and the gain in numismatic coins was 17%. The “spread” between the average loss in stocks and the average gain in gold numismatic coins was 57.6%.
If you’d invested $10,000 in stocks on January 2, A.D. 2008, by December 31st, you’ve have only $6,200—you’d have lost $3,800. If you’d invested your $10,000 in gold bullion during the same time, you’d be up by $290. If you’d invested your $10,000 in numismatic gold coins (purchased from a dealer like Discount Gold and Silver that didn’t gouge you), you would’ve gained $1,960. That’s a difference of $5,760 depending on whether you invested $10,000 in stocks or in numismatic gold coins.
The past does not necessarily predict the future. But those who refuse to learn from history are destined to repeat it.
Where will you invest your wealth in A.D. 2009? Stocks? Gold bullion? Or numismatic gold coins?