Click to enlarge


Yesterday, in response to our post on how wrong the public was back in this 2011 Gallup poll, the following suggestion was made:

Which asset performed best is dependent on your definition of “long term”. 2011-2013 is at best medium term. Long term to most people means decades, 20 years or more. Look at charts for 1993-2013. For young people starting to invest it means their whole working career. That means around fifty years, given current retirement trends. So look at charts for 1963-2013.

The charts above date from 1950 to present.

Its pretty clear that Gold moves in fits and starts; the Treasury market has had an enormous and unusual bull market, and stocks are volatile gainers over the long haul.





Ralph M Dillon

Category: Fixed Income/Interest Rates, Gold & Precious Metals, Investing, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

25 Responses to “50 Year Chart: Stocks, Bonds & Gold”

  1. KaraPlanner says:

    Any data on how housing performed over that timeframe?

  2. Moss says:

    Gold is whacked as real interest rates rise, deficit declines, dollar rises, hot money dumps commodities, US economy improves, acute aspect of crisis wanes, taper talk. Now this could all turn should a European bank fail, US economy weakens, Fed QE stimulus is not ended. Still waiting for oil to crack.

  3. Scott says:

    BR: Good chart, but it doesn’t show what you’re saying it shows, at least for the 10 year treasury data. For ten year treasuries, it’s only showing the yield, not the total return.

  4. PeterR says:

    Ditto to Scott on the 10-year yield vs. price.

    See new first chart at the link above for the period 1980-2013 (the limit of SCC data available), which changes the perspective on relative performance IMO.

  5. MayorQuimby says:

    The takeaway for me is that those bond and equity lines are due to converge. Seems like when the US was most stable (not that I know what that means or even believe such a thing truly exists but…) in the 50′s and 60′s, they moved together. This would jive with the macro picture (easy money Fed of past 30 years).

    Either way, that chart would be more accurate and interesting to me if bond prices were shown vs. bond yields. Also, since major stock indexes consist of different stocks over time, reliable long term indicators for stocks are elusive imo.

    • They have very different risk profiles — that suggests to me that their reward profiles should not converge

      • MayorQuimby says:

        Good point but as they are part of one system I’d have to disagree. Look – nobody in their right mind wants a sh*tstorm but that is just what I see coming. It is taking exponentially higher and higher amounts of credit to keep the two apart. QE tapering threatened that so you see they WANT to converge! If the Fed were to actually taper, they would begin to. Fed has forced itself into an exponentially growing liquidity trap and it is SCARY to me. REALLY frigging scary!

      • DG says:

        “as they are part of one system I’d have to disagree.”

        “It is taking exponentially higher and higher amounts of credit to keep the two apart.”

        Once again, you make absolutely no sense.

  6. Todd in SM says:

    Scott – I second that. In order to reflect the bull run in T-10 prices since the early 80s, that blue line would need to be inverted. IMHO. Are we reading this wrong?

  7. MayorQuimby says:


    Fascinating to think that the Greenspan policies post-1987 (why take the medicine when we can just offset with easier and easier money?) mirror those of the post-Lehman period! One day this insanity will end – but is that day 32 years away or just 2? Sigh…

  8. Widgetmaker says:

    Yes, this is puzzling. How can an investor have lost money holding 10 yr Tsy’s since 1982?

  9. MayorQuimby says:

    Widget- They didn’t. That is new issues coming out at lower and lower yields.

  10. jankynoname says:

    The Sharpe ratio for gold is higher than for equities or bonds (at least going back to 1980, which is a relevant time horizon I think). That’s all it takes to get me over the hump on gold ==> higher expected return per unit risk. In fact, the only other asset class even close to the Sharpe ratio for gold is… housing. Home prices obv tend to move up much more slowly (excluding this year), but also offer significantly less volatility than the markets.

  11. Ralph Dillon says:

    Here is a link to view the Total Return on this chart.

    • Iamthe50percent says:

      Thanks. Eyeballing this chart from 1965 to get the 50-year return, it seems that bonds have recently had a big bull run, but stocks outdid them about two to one, but as Barry said, bumpier and again as BR said, gold was fits and starts.

  12. RC says:

    Yes, it is quite interesting to see that Oil is still at its – unreasonably high, commodities boom, china will buy everything – price. Week after week inventory report comes and tells the same story over and over that there is glut of this black stuff in the market, yet the WTI is sitting pretty at 95 – even in the face of the vicious dollar rally !!!

  13. farragut says:

    Doesn’t the chart also ignore the survivorship bias inherent in the two equity indices? Or, said another way: “What would the chart look like if the Dow and the S&P500 contained their original companies?”

    • Survivorship bias is when you look at the returns from a group of assets — be they mutual funds, or individual stocks — but fail to include the companies or funds that died int he final return data.

      Once an individual stock is removed fromt he index, if it goes to zero or 100000 is irrelevant to the performance of that index. Indeed, thats half the point of an index — there is no survivorship bias because bad stocks get kicked out BEFORE they go to zero.

      • farragut says:

        Thx for responding BR. If the question is “where should you have put your monies over the last 50 years?”, then the equity indices win hands down.

        My point, poorly articulated perhaps, was the comparison is not fair, and potentially misleading if folks don’t recognize the changing nature of the indices. Two singular assets (gold & bonds) are being compared against two other multi-component assets (the indices) in which poor performers (whose continued inclusion in the index would hinder the indices’ performance) are routinely culled.

      • I understand that, and what I am trying to get across is that what you call a bug, I call a feature! The ADVANTAGE of owning indices is the regular, routine non emotional culling of the herd.

        Its not fair that Usain Bolt is faster than you in a race, but he is!

  14. farragut says:

    But I’m not racing against just Mr Bolt–I’m racing against the top 500 sprinters in the world! :)
    I do understand the value of the indices, believe me.

    OK, I’ll drop the matter. Before I do, I’m wondering if you or any readers know of other fields outside of investing where this ‘top 500′ or ‘top 30′ index protocol is followed? I can’t think of any at the moment, but that appears to be an increasing problem of late….

  15. AKBricker says:

    Barry, Your 53-year chart is compelling. The inverse relationship between the ten-year bond and the S&P is obvious. It’s also allows for oversimplification. Conventional wisdom might suggest that as interest rates fall, equity valuations rise, as evidenced by the 32-year trend beginning in 1981. Those who now portend falling equity prices because of imminent rising interest rates may have missed the second obvious point of the chart; the 32-year trend of rising interest rates beginning in 1950 … AND … for the most part … RISING equity valuations. I’d be interested in getting your take on this.