What a £1 coin could have made since 1983

[whittington2308]

I dont know if anyone has picked up on this yet but im a little confused.

http://www.bbc.co.uk/news/business-39306247

in particular- 

This investment in shares would outstrip investing in gold, which would have had a real value of £1.05 by the end of 2016, and a cash savings account (real value of £1.33).

is this true?

[Clens92]

The price of gold on December 31st 1983 was £266 / troy ounce (this is the equivalent of £8.55 per gram of 24ct gold). 

1g / £8.55 = 0.1169 Grams per Pound. 

 

Selling that 0.1169 grams today would yield around £3.65.

 

(I think.  My maths is occasionally suspect, but I think this works).

[whittington2308]

so where have they got £1.05 from?

[Clens92]

1 minute ago, whittington2308 said:

so where have they got £1.05 from?

I have no idea.  The concept doesn't work - gold is worth four times more today than it was in 1983; they appear to have made a mistake.

[whittington2308]

4 minutes ago, Clens92 said:

I have no idea.  The concept doesn't work - gold is worth four times more today than it was in 1983; they appear to have made a mistake.

bbc make a mistake? never!

[whitesands1]

1 hour ago, whittington2308 said:

bbc make a mistake? never!

The quote "real" value, which I think allows for inflation.

 

[whitesands1]

If £1.00 kept only £0.32 of value over this time then at price you quote of £266 per Oz comparing to the price of £1020 at the end of last year adjusted for inflation  = £326.4.

So by my calculation £1 invested in gold would now be worth £1.23 in real terms.

Maybe someone with more mathematical astuteness, than me, might be able to help further.

[TangoTango47]

Original full article here

http://www.mandg.co.uk/investor/news/intelligence/taking-a-pounding---how-inflation-can-erode-the-value-of-1/

Explains it better than the BBC, including their source for gold prices etc.

It's not really surprising is it? Holding Gold is designed to maintain wealth (buying power) which is basically exactly what it has done, and no more.
As always, investments with risk have outperformed that, especially over a reasonably long period and allowing for compound re investment.
Hence a diverse portfolio of assets is best.