Real Rolling Gold Returns compared to Stocks

Previously, I posted historical gold prices back to 1791 and annual gold returns before inflation. In this post, I am comparing the average compound rolling returns (adjusted for inflation) for both stocks and gold over 1, 5, 10, 15, 20, 25, 30, 35 and 40 year intervals. 

For the period 1928-2012, the average annual compound real return of stocks = 6.0% and gold = 2.2%. However, the price of gold was controlled by the government until the mid-70s when the US finally abandoned the gold standard. For the period 1976-2012, the average returns were stocks = 6.7% and gold = 2.5%. 

Gold Data from MeasuringWorth. Stock data from Damodaran Online | Updated Data | Historical Returns on Stock Bonds and Bills - United States.  CPI from Measuring Worth

Graphs created in OmniGraphSketcher then pasted into Illustrator


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Rolling Real Returns: Stocks, Bonds and Bills since 1928

Revisited the Stock, Bonds and Bills data from my previous post, I created a set of real (inflation adjusted) average annual compound returns for rolling time periods (e.g. rolling 5-year returns: 1928-1933, 1929-1934, 1930-1935 etc...) I also included the  average annual compound real return for 1928-2012: stocks 6.0% 10-year bonds 2.0% and 3-month bills 0.5%

Some of the outliers in these returns are due to bubbles. For example stocks in the late 1920s, mid-1930s and late-1990s had unusual large real returns with a corresponding drop. See Long-term Growth Rate of US Stocks)

Return Data from Damodaran Online | Updated Data | Historical Returns on Stock Bonds and Bills - United States CPI from Measuring Worth

Chart created using OmniGraphSketcher; labels added with Adobe Illustrator. 


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Inflation and Price/Earnings Since 1880

Copies of this graphic can be purchased at Zazzle

Inflation is when prices go up. However, inflation's relationship to stock prices can be a little more complex. In this graph, I am revisiting historical data I used several years ago in a series of historical graphs looking at the stock market (see GDP per Capita vs US Stock Prices and Real Growth in Stock Returns Dividends Reinvested).

I graphed the price/earnings ratio back to 1880 and highlighted the years that inflation was high and when there was deflation. The P/E is calculated from trailing 10-year earnings. The low inflation years (5% or less) had the highest P/E while the high inflation years has the lowest P/Es. Deflation years had P/Es near the average.

S&P data from Robert Shiller and CPI data from MeasuringWorth. Graphic was created using OmniGraphSketcher.

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Mapping the US Housing Bubble: 2000-2010


Unlike prices in the stock market (which are the same no matter where you you live) your experience of the housing bubble was determined by your location in the years  2000-2010. These maps (which I created with Matthew Mulbrandon) give a quick and easy glance at the change in housing prices focusing on the bubble in the United States. They show the Housing Price Index (not inflation adjusted) by state. As you have probably seen in the news, the housing bubble was largest in the West and the South East, in states such as California, Arizona, and Nevada and Florida. Those states had the largest increase from 2000-2006 (height of the bubble) and the largest decreases from 2006-2010. However, from 2000 to 2010 one can see all states (except Michigan) had more moderate price increases. You can learn more about the housing market at

Data source: Federal Housing Finance Agency

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Increase in Housing Quality and its effect on Home Values: 1940-2010

Our homes have changed over the last 70 years, including homes size, building technology, family size, and a rise in standard of living. As people's income increased over the 20th century they bought bigger and better homes. This caused the median home value to go up even when taking into account the effect of inflation. For example a full bath cost a lot since you need double plumbing for hot and cold water while a flush toilet needs a home connected to a sewer system or septic tank. In addition, housing costs include both land and the house; where building space in limited (i.e. cities) land will increase in value with population growth. Median home value calculated by the U.S. Census factors in all of these changes and covers the housing markets in both rural and urban areas. While the historical price index created by Robert Shiller looks at home prices as an investment (like stocks) focusing on the resale prices of a subset of the standard, unchanged houses in large metro areas.

Data Source for Housing Price Index from Robert Shiller's Irrational Exuberance Median Home Values: Historical Census of Housing Tables Home Values; "An Approach for Calculating Reliable State and National House Price Statistics" Characteristics: Housing Characteristics In The U.S.Median and Average Square Feet of Floor Area

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