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It looks like GLD has underperformed SPY overall, with a lower Sharpe ratio (risk adjusted return). Gold did have a good run between 2010-2013 though! https://

It looks like GLD has underperformed SPY overall, with a lower Sharpe ratio (risk adjusted return). Gold did have a good run between 2010-2013 though! https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2021&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=GLD&allocation1_1=100&symbol2=SPY&allocation2_2=100 https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...

eru 6y ago
Thanks for setting that up! Though looking at the low correlation between gold and the rest of the market, it looks like you did make an argument there for gold as part of a diversified portfolio.
dash2 6y ago
Are SPDR GLD shares the same as real gold? I read somewhere that ETFs sometimes have to use special tricks to try and match commodity prices....
- chaostheory 6y ago
  Even if the ETFs are completely honest, there have been bars of fake gold in circulation in the news since 2000 https://www.reuters.com/article/us-gold-swiss-fakes-exclusive-idUSKCN1VI0DD https://www.reuters.com/article/us-gold-swiss-fakes-exclusiv... https://www.celticgold.eu/en/gold-university/fake-gold-bars.html https://www.celticgold.eu/en/gold-university/fake-gold-bars....
lorenzhs 6y ago
When investing the same amount every month (dollar-cost averaging), the difference becomes even larger. Using your portfolios, but adding $250/month in addition to the initial investment of $10k, you end up with $128k with gold and $207k with SPY (total investment ~$85k): https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2021&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=1&annualAdjustment=250&inflationAdjusted=true&annualPercentage=0.0&frequency=2&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=GLD&allocation1_1=100&symbol2=SPY&allocation2_2=100 https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t... (with QQQ, it'd be $380k) Comparing one-off investments is very dependent on the start date, and dollar-cost averaging more accurately models what people can actually do and which returns one may be able to expect. Who has a large lump sum laying around to invest rather than investing a portion of one's income every month/quarter?
- roland35 6y ago
  Yes that is a good point, and is something to think about when comparing investments. Everyone's investment goals are different so make sure you understand what your goals are when reading research!

eru 6y ago

Thanks for setting that up! Though looking at the low correlation between gold and the rest of the market, it looks like you did make an argument there for gold as part of a diversified portfolio.

dash2 6y ago

Are SPDR GLD shares the same as real gold? I read somewhere that ETFs sometimes have to use special tricks to try and match commodity prices....

chaostheory 6y ago
Even if the ETFs are completely honest, there have been bars of fake gold in circulation in the news since 2000 https://www.reuters.com/article/us-gold-swiss-fakes-exclusive-idUSKCN1VI0DD https://www.reuters.com/article/us-gold-swiss-fakes-exclusiv... https://www.celticgold.eu/en/gold-university/fake-gold-bars.html https://www.celticgold.eu/en/gold-university/fake-gold-bars....

lorenzhs 6y ago

When investing the same amount every month (dollar-cost averaging), the difference becomes even larger. Using your portfolios, but adding $250/month in addition to the initial investment of $10k, you end up with $128k with gold and $207k with SPY (total investment ~$85k): https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2021&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=1&annualAdjustment=250&inflationAdjusted=true&annualPercentage=0.0&frequency=2&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=GLD&allocation1_1=100&symbol2=SPY&allocation2_2=100 https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t... (with QQQ, it'd be $380k) Comparing one-off investments is very dependent on the start date, and dollar-cost averaging more accurately models what people can actually do and which returns one may be able to expect. Who has a large lump sum laying around to invest rather than investing a portion of one's income every month/quarter?

roland35 6y ago
Yes that is a good point, and is something to think about when comparing investments. Everyone's investment goals are different so make sure you understand what your goals are when reading research!