By JLP | February 11, 2011
Gold’s ride in 2010:
The price of gold closed at $1,087.50 on December 30, 2009. It closed at $1,405.50 on December 31, 2010. That’s a 29.2% increase for 2010. Wow! Compare that to the S&P 500’s total return of 15.06% and you have double wow!
I spent a little time putting together a couple of graphics showing gold’s ride since 2000 and also compared it to the S&P 500 Index.
I wanted to do a comparison of the monthly performance of gold vs. the S&P 500. I only have monthly returns for the S&P so I had to make a couple of adjustments in order to get a side-by-side comparison. So, for this graphic, I assumed a base value (beginning value) of 100 and then computed monthly values for both from 2000 – 2010. This is what I came up with:
What’s interesting is that through all 132 months, the S&P 500 had only four more months with the negative returns than gold. But, gold had seven months with returns over 10% while the S&P 500 had none.
Looking at all this brings to mind a few questions:
1. Is gold in a bubble?
2. How high can gold go?
Unfortunately, I don’t know enough to speculate on either one.
Source: My source for daily gold price numbers was USA Gold