Thursday, 14 July 2016

Chart of the Day

I 'd like to do the same for the FTSE All Share, but I can't find the data.


Steven_L said...

If you extrapolate from a stock market bottom like 2003 or 2009 rather than a gold market bottom, how does it look then? Might it be better to do one from the Nixon shock of 1971?

There's no gold in my SIPP (although in hindsight I wish there had been in the run up to the referendum). I just can't get my head into the mentality of the herd, which is the only thing that drives it as far as I can see.

But then I could never get interested in football either. So I'll stick with my contrarian stock-picking strategy, it just suits my personality.

Mark Wadsworth said...

SL, good point. For the wise individuals who have owned gold for decades, this is a win, but is it a win for humankind or the economy as a whole? I don't think so. Gold is just the end result of other more important factors like flight to safety, speculation and low interest rates.

Bayard said...

What is DJIA?

Steven_L said...

Dow Jones Industrial Average - an index of the shares of 30 big US listed companies, supposedly representative of the market.

Personally I prefer the S&P500 - which is the 500 biggest US listed companies and is adjusted for dividends.

Steven_L said...

For the wise individuals who have owned gold for decades

You mean Indians and Travellers? I don't think it's because they are wise, it's more about tradition and hiding money from the taxman.

Lola said...

MW et al. The graph is from Priced in Gold web site. The point they are making is that the price of gold is constant through time. Or more strictly the value of gold is constant through time. Stuff gets cheaper vis a vis gold as a result of capitalism working out how to more for less every day. But other stuff stays at the same price - the pay of a junior officer in the military for example. And still other stuff gets more 'expensive' v a v gold, principally currencies. That is currencies decline against gold. The gold price doesn't increase, the USD (say) declines.
What this graph shows is that the creation of real wealth in the stock market is illusory. (I think it is a net of income graph). And yes the S&P500 would be better (income reinvested) as would the FTSE All Share (-do-).