1. You can't just look at changes in the S&P 500 over time without including dividends. If you include reinvested dividends (which is what most investors do), the S&P 500 returned 324% since 1/1/1997 (his 20 year period)- which beats the return for both gold and silver that he stated. In the 5 year period he used, the S&P returned 92%, while gold and silver both went down over that period. In the 10-year period, gold and the S&P with reinvested dividends performed the same - up 95.4%. Only in the 15-year period he used did gold outperform the S&P with reinvested dividends. So he chose 4 different time periods to compare metals to stocks and gold outperformed stocks in only 1 of the 4. How does this make a strong case for gold?
How does it make a strong case for anything that under performs that benchmark, like bonds for instance?
Bonds have a much lower risk profile than stocks, by any reasonable measure. It makes sense that their expected return would therefore be less. Bonds also have negative correlation with stocks, giving them special value in a balanced portfolio as one can reduce risk substantially while only slightly reducing expected return with just a little bit of bonds.
Gold is just as risky, if not more risky than stocks. Just like stocks, gold can drop 50% in a short period of time (or more), but unlike stocks, gold has a habit of not bouncing back for decades. Gold may arguably have some negative correlation with stocks, but not to nearly the extent that bonds have, and they can become correlated at the worst possible times.
Gold also makes for a very terrible form of currency. It's very difficult to split into smaller denominations. It's natural volatility makes it a terrible store of value for periods of less than 100 years (if you're looking for a store of value for 10,000 years then it may be a decent option). It is completely non-fungible without someone verifying exactly what its purity is.
1. As risky as stocks, possibly more risky
2. Makes for a poor hedge
3. Makes for a poor currency
4. Expected real return on investment is 0%, possibly negative
Sounds like a great deal to me!