Alternatively assume silver was held from 1933 onward given that investment gold was outlawed. The US geological survey site has silver value data from 1900. Pre 1933 however I assume investors would have held treasury bills/notes/bonds instead, as money was pegged to gold - made more sense to hold treasury bills that paid interest as that was like the state paying you for it to securely store your gold, convertible at any time. On that basis I assume investors might have held 50/50 stock/T-bills pre 1933. In my non-US case gold was still legally available to be held from the 1930's so I use gold in my backtests for those years, but when I compare that to holding silver instead and the characteristics/outcomes were broadly similar/same. Gold somewhat plateau/stepped up whilst silver was more consistently price volatile. That plateau/step type gold value progression even continued into the post 1970's years, 1980 to 1999 for instance saw the price of gold decline in nominal terms to then catch up with inflation again in 2011. Such down-slope enabled more ounces of gold to be accumulated at progressively deeper discounts, a conventional PP for instance accumulated around 11 times more ounces of gold across 1980 to 1999.D1984 wrote: ↑Fri Nov 19, 2021 1:14 am2. Gold returns during the early years (1972 to 1974) were possibly artificially inflated due to gold coming off the decades long fixed price of $35 an ounce (i.e. some of the returns that likely would've happened from the early or mid-1960s onward all instead got shoved into 1971-1974 since from 1960 to early 1968 gold was artificially kept fixed at $35 per ounce). Solution? Backtest this using the "nerfed gold from 1970 to 1974" series I mentioned elsewhere on this board; I did annual backtesting on this SCV/gold/10-year Treasuries combo using that series and the returns were still pretty good for 1972 to 1974.
A primary risk with gold is that of interest. Generally we see interest and prices decline, interspaced with periods when interest is rekindled and its price is restored to pacing inflation typically at times of distress/decline in the fiat system or other geopolitical risks. Those with surplus capital look to preserve the purchase power of their capital and may buy the likes of art/paintings, silver/gold ...etc., scarce/finite assets that are broadly more inclined to at least pace inflation albeit in a sporadic manner. Others who require capital sell some of those scarce assets to others who have additional surplus capital and where physical/portable in-hand assets are part of the buyers consideration. Alternative currencies, similar to how cigarettes can be legal tender within prisons.