How has that advice worked out? Gold averaged about $390 per ounce in 1994, while the S&P 500 averaged about 460. In other words, the S&P 500 was worth 1.18 ounces of gold. Fifteen years later, the S&P has fallen to 1 ounce of gold, meaning it's lost 15% of its value over that time. Stocks for the long run, indeed.
But maybe 15 years is not "long run" enough. Surely, stocks will do better if we give them more time. Let's go all the way back to August 1971 when Nixon closed the gold window and let the Federal Reserve have its filthy way with the dollar. The S&P 500 was at 100 then, and gold was at $35, meaning the S&P was worth 2.86 ounces of gold. Thirty-eight years later, the S&P 500 has lost 65% of its value in gold. If that's not the long run, only Methuselah should own stocks.
But gold yields nothing, you object. Stocks pay dividends.
Maybe I'm cherry-picking the last hot thing, as Siegel was in 1994. But in a fiat currency regime, gold is one asset class that Zimbabwe Ben Bernanke and Trillion-Dolla Obama can't debase. It seems to me it merits a much larger weight in a portfolio than the 0% most individuals and pension funds hold.
*This was incorrect. The index series I used was price-only, not total return, so it does not include dividends. Standard & Poors apparently does not have a total return series available on its web site. It appears, however that even including dividends, stocks still underperform gold, but to a lesser degree.