Assumptions behind $1 return on various asset classes. Refer to the diagram below, found on pg. 67 of The Safe Investor
The analysis is based on closing prices on the last date of each month (the results might change slightly based on frequency of data. i.e., daily, weekly, and yearly). The data description for each category is as follows.
- Gold: Gold prices for 1900 to 1933 are the official price of gold as set by the U.S. Government. Historical prices for the United States are taken from the Commodity Research Bureau, Commodity Yearbook, Chicago: CRB since 1933. From January 30, 1934 until March 1968, the gold transactions of the U.S. Government for both monetary and industrial purposes were made at $35 per fine ounce, plus or minus a handling charge of one quarter of one percent and less mint charges. In 1968 a two-tiered gold system was instituted under which the private commodity price of gold was permitted to fluctuate without official intervention, while the official price and role of monetary gold remained unchanged among monetary authorities. This system was terminated on November 10, 1973 because of the wide variations between “official” prices and market prices. From 1973 on, separate series are provided for the daily PM Fixing price for gold in London and the daily price of gold in New York. The prices are quoted in Gold Bullion Price-New York (US$/Ounce).
- Treasury: Treasury prices are based on 10-year Government Bond Total Return Index. Total return includes reinvestment of interest payments.
- S&P 500: S&P 500 data is based on composite price index and dividend. The analysis assumes reinvestment of dividend.
- Consumer price index: The Consumer Price Index (CPI), 1982-84=100, is calculated on the basis of a market basket of 305 entry level items representing all goods and services purchased for everyday living by all residents in urban areas. These residents include about 87 percent of the total civilian non-institutional population, including wage earners and clerical workers, professional, managerial, and technical workers, short-term workers, the self-employed, the unemployed, retirees, and others not in the labor force. Each month 80,000 price quotations are obtained from approximately 23,000 outlets. About 50,000 housing units are contacted to collected data on rents. The weights for the CPI are derived from the Consumer Expenditure Surveys for 1993-95, and the average for those 3 years. Historically weights have been revised once every 10 years; however, starting in 2002, weights will be revised every other year.