You Could Have Made 30% More If You Bought Gold Instead of Toronto Real Estate
The comments below are an edited and abridged synopsis of an article by Better Dwelling
In times of economic uncertainty, investors’ most popular investment is real estate. Better Dwelling wanted to see how that compares to the world’s second most popular hedge, gold. The average home at the last real estate peak in 1989 was CDN$273,698. By the end of 2016, the average price of real estate was CDN$729,922. This means that, even accommodating a real estate crash, an investor would have made a 166% increase on his/her investment. A better scenario would have unfolded if the same money had been invested in gold. Let’s say an investor spent the same CDN$273,698 on gold, giving him/her 606.6 ounces of the yellow metal. In 2016, gold was trading at CDN$1,004 per ounce, which makes 606.6 ounces of gold investment worth CDN$1,004,104. Over all, gold outperformed one of the world’s best-performing real estate markets over a 27-year span with a 266% return.
In the meantime, Canada’s central bank has dumped all of its gold reserves, while countries like Russia have been buying tonnes to keep their currency relevant.
The author reported wrong data for the gold price in 1989 and 2016. According to Ycharts, the gold price at the end of 1989 was CAD$461.63 and CAD$1536.71 in 2016. If BMG were to write this sentence then it would look something like this:
Let’s say an investor spent the same CDN$273,698 on gold, giving him/her 592.9 ounces of the yellow metal. In 2016, gold was trading at CDN$1,536 per ounce, which makes 592.9 ounces of gold investment worth CDN$910,686. Overall, gold outperformed one of the world’s best-performing real estate markets over a 27-year span with a 232.7% return.