Take stocks over gold.                                                       Photographer: Kiyoshi Ota/Bloomberg
Take stocks over gold.                                                       Photographer: Kiyoshi Ota/Bloomberg

Source: Visualizing Economics
Source: Visualizing Economics

The chart above shows the rolling returns for stocks and gold.

Catherine Mulbrandon of Visualizing Economics writes:

For the period 1928-2013, the average annual compound real return of stocks = 6.3% and gold = 2.0%. 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 1976-2013, the average returns were stocks = 7.2% and gold = 2.0%.

The most fascinating aspect of this chart is that nearly all of the long-term returns for equities are positive. Returns are positive about 80 percent of the time for 10-year rolling returns and considerably higher than that for 15-year rolling returns. For stocks, every period of rolling returns greater than 15 years is positive.

Gold, on the other hand, can't make the same claim. There are positive and negative return rates, regardless of the length of time an investor was willing to hold onto their gold. Even some 40-year periods still yield negative rates of return.

To contact the author of this article: Barry Ritholtz at britholtz3@bloomberg.net.

To contact the editor responsible for this article: Alex Bruns at abruns@bloomberg.net.