Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
X •  LinkedIn

  A Performance Snapshot Of Three Traditional Wealth-Building Asset Classes
Posted Under: Conceptual Investing
Supporting Image for Blog Post

View from the Observation Deck  

  1. Of the three asset classes depicted in the chart above, gold mining stocks have outshined both large-capitalization stocks (S&P 500 Index) and equity REITs (FTSE Nareit All Equity REITs Index) over the past five years.  
  2. The total returns featured in the chart through 9/9/20 were as follows (S&P 500 vs. FTSE Nareit All Equity REITs vs. Philly Gold and Silver): 15-year avg. annual (9.19% vs. 6.78% vs. 3.90%); 10-year avg. annual (14.23% vs. 9.58% vs. -0.54%); 5-year avg. annual (14.12% vs. 8.11% vs. 29.27%); 3-year avg. annual (13.53% vs. 3.92% vs. 20.09%); 1-year (16.33% vs. -8.77% vs. 69.47%); and year-to-date (6.61% vs. -9.94% vs. 45.57%).
  3. From 9/9/15 through 9/9/20, the price of gold bullion rose from $1,102.00 per ounce to $1,946.80 per ounce, or an increase of 76.66%, according to Bloomberg. Over that same period, the Philly Gold and Silver Index (mining stocks) posted a cumulative total return of 261.46%. Does anyone remember why gold rallied? 
  4. One of the top reasons investors purchase gold bullion or gold mining stocks is to help mitigate inflationary pressures. Some pundits might even go so far as to say that gold has been a reliable inflation-hedge through the years. Over the past five years, however, the Consumer Price Index has averaged just 1.7% per year, well below its 3.0% average since the start of 1926, according to data from the Bureau of Labor Statistics.
  5. Some investors flock to gold as an alternative to owning fiat currencies when geopolitical or economic concerns are elevated. That does not really fit the narrative for the past five years. The U.S. Dollar Index declined just 2.86% for the period, which reflects stability, in our opinion.
  6. The rally in gold has been strong, particularly over the past year. The COVID-19 pandemic has likely been the primary driver of demand for the metal in 2020, in our opinion. Imagine where demand could go if higher inflation were to become a byproduct of the trillions of dollars of stimulus that has been pumped into the U.S. and other major foreign economies these past few months. 

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance. The FTSE Nareit All Equity REITs Index is a free-float adjusted market capitalization-weighted index that includes all tax qualified REITs listed on the major U.S. exchanges. The Philadelphia Stock Exchange Gold & Silver Index is a capitalization-weighted index comprised of the leading companies involved in the mining of gold and silver. The U.S. Dollar Index (DXY) indicates the general international value of the dollar relative to a basket of major world currencies. 

Download a PDF of this post, please click here.
Posted on Thursday, September 10, 2020 @ 1:59 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

Natural Gas Prices Have Surged Of Late
A Snapshot of Growth vs. Value Investing
A Snapshot Of Moving Averages
E-Commerce Sales Are Thriving
How Bonds Have Fared During The Rebound In The Stock Market
How Stocks Have Fared In The First Year Of A Four-Year Presidential Term
Homebuilder-Related Stocks Closing In On 2005 Historical Peak
A Snapshot Of Bond Valuations
Internet Advertising Revenue Still Growing At A Double-Digit Clip
The Action In The Stock Market Has Been Fast And Furious
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.