Stock brokers like to reference the $850 price of gold in 1980 as “proof” that gold has performed poorly.

December 27, 2010 – It has been a hectic year and now is a good time for those who have invested in gold coins to fetch a few from their safe deposit boxes, sit back, turn them over in their hands, and have a good chuckle at the stock pushers’ expense. What they are holding has grown in value over the past decade nearly four times that of Disney, the best performer of the Dow 30. But if you have let Wall Street talk you out of investing in gold coins it is a good time to take a closer look at their arguments.

Stock brokers like to reference the $850 price of gold in 1980 as “proof” that gold has performed poorly. The reality is that point was an anomaly and anyone who bought at that price, to put it bluntly, was nuts. Gold peaked above $800 on only two days early that year and the $850 mark was reached only once. In contrast, the average high for January and February was $670 and that for the entire year was $613. Plug in those numbers and the picture changes dramatically.

A more reasonable reverence point is 1971, when we went off the gold standard. From that point forward gold has been free to seek its own fair value, unfettered by arbitrary government fixing. With that perspective gold has strongly and steadily outdistanced the consumer price index, and its growth in purchasing power puts stocks to shame.

A good way to illustrate that point is to put the price of the Dow in terms of gold. At the beginning of 1972 the Dow 30 was equivalent to 20 ounces of gold but it takes only eight ounces to buy the Dow today.

The choice is simple: feed the greed of Wall Street traders or build wealth through investments in gold coins.

Kevin Johnson

Senior Staff Writer – GoldCoin.net