The counterpoint to precious metals, despite the "it can only go up" logic that is quite convincing, is that there were extremely prolonged periods of losses in precious metals like gold during periods of economic uncertainty way worse than today. Such as the period from 1982 till 2006 (let alone the losses sustained by holding gold from 1980). The price of precious metals simply did not react according to the logic presented today.
There are plenty of growing sectors and there will continue to be.
Of course, if you want to dollar cost average your whole salary in low growth sectors or metals for 25 years, you should still come out ahead on any uptick two dozen years from now.
> "during periods of economic uncertainty way worse than today. Such as the period from 1982 till 2006"
The bulk of the period you mention is referred to as Great Moderation by high fiving central bankers. It’s part of one of the great green areas on the chart of the original post. It was marked by disinflation, fall of the Iron Curtain, corporate adoption of computers, globalization, trade and offshoring. (And rising central banker activism and financialization.) And yes, gold went through a gruelling secular bear market during the Great Moderation.
Conversely, all big red areas on the chart saw positive action in gold.
In the 1930s-1940s large quantities of gold were being hoarded. The official price of gold itself was fixed but e.g. gold mines did great.
In 1960s gold was being hoarded again, to the extent that by 1971 they had to give up the fixed price and let it float.
Since 2000 gold has being doing great again (with corrections in 2008 and a bigger one since 2011). Interestingly enough, the latest correction seems to have reversed the exact day Yellen decided to hike rates with 0.25%.
Imagine you could reconstruct a performance chart for gold, similar to the S&P chart of the original post. I’m fairly sure it would be roughly inverse to the original S&P chart.
(In practice it’s hard to really do this, because the gold price was fixed until 1971. So before 1971 you’d need to reconstruct perhaps some kind of measure of “stress” on the price fix, or use an imperfect proxy such as gold mines.)
> "There are plenty of growing sectors and there will continue to be."
True. But in some eras an investor can make a 1000 mistakes and still expect a good outcome. In other times there’s much less room for mistakes in terms of timing and securities picking. Things are harder, like really much harder. The difference is caused by general valuation levels, the kind of profits that are being priced in, and by the amount of eyes that are looking at the same things.
That's just a different formulation of the exact same message the original chart is telling us.
The last great investment desert ended ~35 years ago. Once again, around the time when people where lining up to buy gold. Crawling out of that desert, if you thought you had found a bargain on the stock market, a real gem of mispricing, chances were good that it actually was a bargain.
In my humble opinion, we're somewhere deep inside another investment desert. This one appears to have longer lasting and more elaborate fata morgana's than before. But I expect we will witness a few serious extinction events before we can even think about crawling out.
There are plenty of growing sectors and there will continue to be.
Of course, if you want to dollar cost average your whole salary in low growth sectors or metals for 25 years, you should still come out ahead on any uptick two dozen years from now.