Gold Ain't So Bad, Stock Market Data, and Houses vs Stocks

Robert Hunt (0:23)

Welcome to the Robert Hunt Financial Market Update. It's your host, Robert Hunt. Well, look at the week's financial news. It's gonna be a bit confusing, misleading. And they, of course, have to make it actionable, understandable, and clear. What a week, what a show, what a lineup.

Sometimes it all comes together.

SPEAKER_2 (0:41)

Boom, boom, boom.

Robert Hunt (0:43)

This is one of those shows.

SPEAKER_2 (0:44)

We're gonna be looking at gold.

Robert Hunt (0:47)

Silver and gold, silver and gold. We're coming up on Christmas time, so you knew we had to do it, but it's been coming up in a lot of conversations with clients I wanna bring you in. We also have fun stock market data. It's just another treasure trove. Another treasure trove. We're then gonna look back at last week, that big market drop. I got some text, I got some comments.

Market's down over 4% in a day. It was told, hey, this is one of the largest drops in stock market history on a market value basis, not a percentage basis. We're gonna look back at that thing in the review mirror, see how it felt.

And then we have the house first stock market.

SPEAKER_2 (1:29)

It's an age old debate.

Robert Hunt (1:31)

Derek Horshmeyer brings us in to an article about it. So we'll look at it, but let's start with gold, because I want to clarify some comments. I've spoken about gold in years past, and why is gold on my mind? It's because it's on your mind. This has come up with clients and friends who have mentioned, hey, gee whiz, do you think I need exposure to gold here? There's concern about the national, the debt.

Whatever, 40 trillion, 30 trillion, whatever the number is, you just kind of numb out, don't you? Will this be hyperinflationary? Therefore, will gold be a solution? Bitcoin's fallen a little more out of favor, but will gold be something I should do? And I've got a chart I typically bring out, declines in this moment, I've laminated it. It's 1801 to about 2021, and it shows a dollar invested in gold. Real returns in 1801 is about four bucks in 2021 A dollar invested in stocks in 1801 is 2.3 million dollars.

I'll say it again. A dollar in gold in 1801, four bucks in 2021 A dollar in 1801 in stocks is 2.3 million. And that's usually my, hey, case closed. Let's get you back on this index fund thing, because we're gonna be index fund people, and that's what we do, hammer nail. I can be a little dogmatic at times, but I went back and I thought, is this a chart crime? Perhaps you've heard that language, a chart crime. It's where the chart may be actually true, but not accurately convey the point you wanna convey. It could be misleading in a sense. So, I went back and I talked to ChatGBT. I took a picture of this chart, and I said, is this a fair chart? And ChatGBT said, well, technically, yes, however, it's misleading in this way.

In 1971, the United States delinked from the dollar, I mean, gold from the dollar, it really set itself loose. And I thought, oh, oh, so perhaps it's an unfair time parameter, because it was basically dead money, gold was from 1801 on my chart to present. And so I thought, well, okay, well, what if we did it from 1971? And then the answer gets interesting. I'm gonna just pull this right off the printing press here. Okay, 1971 Now, some of my listeners are old enough to remember this time period. Lot of inflation, uncertainty, stocks did not do well in the 70s. Check this out.

If you started investing in 1971 in US stocks, you had annualized returns of about 11%. 1971 to present, pretty good.

SPEAKER_2 (4:18)

Gold is 9%. Whoa!

Robert Hunt (4:22)

But on that chart, what about that chart I showed people? That showed $1, well, that's true. That's true. But, not a bad return.

From 1971 to 2025 And what about 10-year treasury bonds? 6%. Treasury bills, 4.5%. And inflation was about 3.9%.

So gold, so for all of my, oh, why would you even think about gold? And Warren Buffett's influenced me a great deal. He would tell a story about the productivity of a farm versus a bunch of gold coins, the productivity of an operating company versus a bunch of gold. And it's true, even in this, this is probably one of the more favorable time slots I can show, where 1971 to present, gold's performance, it still gets beat by stocks.

SPEAKER_2 (5:10)

But, but, but, but, it ain't that far off.