Gold vs the S&P 500: 1984-2016

From 1984 to 2000, an investor could buy stocks and hold them for a long time without worrying. The economy was growing, spurred by technological innovation and a favorable political landscape. Debt increases were relatively small, and in the late 90’s, a surplus even emerged. In this stable environment, gold acted like an insurance policy you never took a claim on. Since 2000, economic and political conditions have deteriorated. A “boom and bust” cycle now periodically threatens investors. In 2007, a housing bubble led to the Great Recession. Now, stocks and bonds are again overvalued. Government spending has surpassed all manageable limits and the world faces growing threats as US power wanes. In this environment, an allocation to gold is essential for any portfolio.