The Gold as Protection for Financial Crises

Investing in Gold: Numbers and Statistics


1 Low volatility until 1999.

The evolution of the price of gold between 1994 and 1999 was very slow and was practically in the zero-zero. The reason is that the price of gold in Brazil is heavily influenced by Dollar.

Until January 1999, the exchange rate in Brazil was the standard regime of exchange bands in the Dollar could only vary within this band imposed by the government.

After that date, the value of the dollar began to vary freely, with more volatility and thus affecting the price of Gold.

Gold has 2 return of 70% in a single month.

The month was January 1999 The pressure for devaluation of the Brazilian Real was great since 1994, however, due to the exchange rate band, the value of the dollar did not rise as much as it should, if it could vary freely.

With the end of the exchange rate band and the start of free variation of the dollar, the value of the dollar has risen almost 65% in January 1999.

Gold followed this trend, with a return of 70% this month.

Strong 3 "Channel High" since 2008

Plotted on the graph one channel high 2008 until today (20/02/2013).

Notice how the price of gold touched three times both the top and base of the channel that extended period.

Not that I believe that the price will "respect" the channel, not that kind of Technical Analysis is risk-free (read more here), but when a trend becomes clear in a time like this for almost five years, is, in least interesting to watch her.

Thus, the Gold has its price today close to $ 100.00, worth almost 10 times higher than July 1994 (R $ 11.35).

And as the evolution of the gold price compares with diverse assets?

This means that if the investor had invested £ 100,000 in assets linked to the CDI, it would be today with R $ 2,968,000.

The same goes for all assets between July / 94 and February / 13:

     CDI: R $ 2,968,000
     Bovespa: R $ 1,673,000
     Gold: R $ 874,000
     Dollar: £ 200,000

Data is important, however, know that the pre-1999 exchange rate policy precluded the advancement of the Dollar and Gold, as well as interest rates at the time bordered on 50%, favoring investments linked to CDI unlike others.

And if the start of the analysis were 1999?

Check the value for an initial equity of R $ 100,000 between January / February and 99/13:

     Gold: R $ 950,000
     Bovespa: R $ 899,000
     CDI: R $ 737,000
     Dollar: R $ 165,000

Investing in Gold during this period was a great deal.

1 Gold in front of CDI?

In the evolution of assets from 1994 to 2013, CDI filed a return three times higher than Gold. However, the period of free exchange, Gold took the lead, with an annual return of around 21%, as we will see below.

2 Bags faltered. Gold gains.


Many analysts still reinforce the thesis that the world economy has not yet recovered from the crisis and that new rounds of settlements of actions are common in this decade.

Some analysts who idolize investment in gold, called gold bugs, go further and believe that money as we know it today is in crisis, which is why many are looking for investments in Gold, as a way to return to origins (metalism) .

The rampant growth of American debt and its various bailouts are a cause / result of this whole process, which results in an increased demand for Gold.