Claim 15 of 22
Gold: protection in a crash
Does gold protect wealth when markets crash?
Verdict
Not established
Gold rose 4 per cent in 2008 while the S&P 500 returned −37.00 per cent, and it lost less than the S&P 500 between 6 and 16 March 2020 (13.4 against 19.7 per cent, on unlike measures), yet it fell 29.5 per cent between March and October 2008, and two episodes cannot show that gold protects wealth in a crash in general. Like the Bitcoin claim before it, gold's claimed protection rests on a record that tests too little.
The cost, from the book's own figures. Gold bought at the London PM record of $1,011 an ounce on 17 March 2008 was worth $712.50 on 24 October 2008, 29.5 per cent less, in the same year that the calendar figure records as a 4 per cent gain, and in March 2020 gold fell between 10 and 13 per cent in about ten days.
Made by: Rickards (The New Case for Gold).
Test it on your own numbers
- United States: CFTC and FINRA investor bulletin, 20 March 2024 (finra.org/investors/insights/buying-physical-gold-or-other-metals), from the Commodity Futures Trading Commission (the US regulator of futures and commodity markets) and the Financial Industry Regulatory Authority (the industry body that oversees US brokerage firms), to read before buying physical gold or other metals.
- United Kingdom: FCA's Financial Services Register (fca.org.uk/firms/financial-services-register), to check any firm selling a gold-linked investment.
- Australia: ASIC's warning about digital gold vault investments, 11 September 2024 (asic.gov.au/about-asic/news-centre/news-items/asic-warns-consumers-of-suspicious-investment-opportunities-in-digital-gold-vaults), to read before putting money into a digital gold vault.
The full test, with every figure dated and sourced, is in chapter 15 of the book.