Is the Jump in Gold Price Really That Impressive?

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The short answer is no. It is not. Sure, you can go by the idea that had you bought one ounce of gold in 1980, you'd have paid $600 for it, and now it's worth $4,000 or more. Nice gain, right? Not really when you keep in mind that gold has no compounding value when it comes to what it is worth. Had someone taken that same $600 and invested it purely into the S&P 500 in 1980, with dividends reinvested, that $600 would now be worth $106,000. Far more than the 45-year gain of $3,400 gold saw. That's not to say gold, or precious metals, don't have a place in one's overall portfolio. But what you are buying when you do buy precious metals is safety. Not growth. And there's a big difference. So, is it really an "investment?" Kinda sorta. Most people don't buy precious metals to "invest" in future financial interest. They buy it because regardless of what national currencies do, it will always have value beyond it. Nobody ever got rich buying precious metals and holding onto them, is my point. That only comes from investment into things that grow exponentially and have the ability to be compounded. If you could buy an ounce of gold and that one ounce was now 10 ounces, you'd make money. But that doesn't happen. There's one other thing to consider here. Inflation. The average inflation in the United States for the past 90 years has been 3.24%. So, the real profit, adjusted for inflation is not actually $3,400. It's only $1,567.60, meaning sitting side by side the guy who invested his $600 in the S&P 500, he's $104,432.40 ahead of you.