by Ken Spitze

Created on: March 20, 2009

Gold and silver have long held the fascination of mankind. It has been used in jewelry and has adorned kings and rulers, both in life and in death. But these precious metals have also been a choice for accumulating and holding wealth.

But what is the best investment for the future? Should you put your money in gold and silver or should you invest in the stock market? This is a question that has received considerable attention over time, and one that will continue to do so into the future. The truth is that these two classes of investments each have been the better choice for substantial periods over the past decades. However, either one or the other is quite a bit better at any point in time.

If one looks at the past 40 years, the price of precious metals and the advancement of the stock market have had three distinct periods. Between 1968 and 1980, the stock market was essentially flat: the annualized return was just 0.2% per year. However, the average annual returns on investment in gold and silver for that same period were 26.5% and 19.4%, respectively. However, between 1980 and 2000, things were reversed: the stock market advanced at an average annual rate of 12.8%, while gold dropped 3.8% and silver dropped 6.2% per year. This decade, things have change again: we've seen the stock market drop 2.5% per year, while gold and silver rose at annual rates of 15.6% and 11.3%.

This seems to indicate that the best investment was gold and silver during the late 60s and throughout the 70s, a time when our country was involved in a costly war and experiencing tough economic times. During the relatively stable and prosperous years of the 80s and 90s, precious metals actually lost value while investments in the stock market, and therefore in the businesses of our nation, did very well. The recent unrest of the Iraq War and rapidly growing National Debt have once again resulted a poorly performing economy and stock market and rapidly advancing gold and silver prices.

So, what will the future bring? If you believe that we will rapidly return to economic growth and increased employment, then the stock market is the place to be. If you believe that we will have an extended period of recession or even depression, perhaps your money should go into precious metals.

In 2020, someone can write an update to this article and tell us what we should have done. The question is, who can best predict what the near-term future will bring and make the "proper" investment?

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