Is Gold a Good Investment? Gold Price Prediction Using Machine Learning Techniques
This blog post is adapted from a capstone project created by Aihui Ong for Springboard’s Data Science Career Track.
Is gold a good investment in general? SPDR Gold Trust (GLD) exchange-traded fund (ETF) tracks the price movement of gold and is a cost-effective and convenient way to invest in gold without buying the real gold.
I’ve owned GLD since 2011 and the price then was $151. Honestly, at that time, I was still new to investing and all I read about was to invest in gold to diversify and recession-proof my portfolio and it’s a safe haven to protect myself against a possible catastrophe. Clearly, it hasn’t panned out that way!
To Sell or Not To Sell?
From the graph below, GLD price has declined since 2011. So, should I sell and cut my losses or should I hold on? When I asked myself this question, it was in November 2019 and the price of GLD then was $138. I’ve decided to take a more data-driven approach to answer this question.
Is Gold Still a Good Investment in General?
Whether to sell or to hold GLD, let’s see if gold is still a good investment using a financial analysis approach. If not, it might be better to cut my losses and invest in a higher-growth investment.
Past 15-Years Performance
Let’s compare the performance of GLD vs S&P500 index (e.g. SPY) for the past 15 years from 2004 to 2019.
GLD started trading in 2004. If you’ve invested $10,000 in both GLD and S&P 500 in 2004, this is what you would have made 15 years later.
