Inv35t,
I'm not to sure this tells us too much about the value of gold over time. The investor had one ounce in 1928 and now he has 17 ounces. As gold produces no dividend he could only have bought these extra 16 ounces from the profits he made from stocks through the 50/50 rebalancing.
It might be better to look at what was an ounce of gold worth in 1928 and what is it worth now in real terms. What would the equivalent value of stocks bought in 1928 be worth now in real terms. I suspect it must be an awful lot higher to pay for these 16 ounces of gold.
I hold 10% of my portfolio in physical gold which I maintain through rebalancing but only as insurance against things getting really bad not because I expect it to make a return.
brugen
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