It's VERY easy to pile in on all the "gold sucks" posts that have flooded the blogosphere over the last few weeks, but I thought the below chart was interesting enough to share. My view of gold is that I don't think gold makes a ton of sense as a traditional investment as there is no way to know it's value (during the gold mania of a few years back, I used to ask prospective employees in interviews whether gold was cheap or expensive - whatever they answered, I would ask at what price it would be the opposite... rarely did I get a decent response). I do think it can make sense as a diversifier (in small amounts) and is a great way to play investor sentiment (see my post from early 2009 Ready to Ride the Golden Bubble that proceeded a more than doubling of the price).
The chart below shows is the cumulative growth of $1 going back in time for an investment in gold or stocks (the S&P 500), in reverse order. For example, $1 invested in the S&P composite 1950 is worth ~$1000 today, while an investment in gold at that same date is worth only ~$30.
In addition to the outsized outperformance of stocks vs. gold going back in times, this chart outlines that an investment made in gold would have underperformed stocks over EVERY SINGLE PERIOD before 1997 and almost every period after 2002. So... unless you were one of the rare investors to make an allocation in the 1997-2002 window (i.e. pre gold ETF incepion), you've underperformed.