Gold has been a proven investment for thousands of years. Why? Because gold holds its value for generations and is universally recognized as a store of wealth.
Gold generates robust returns across economic cycles. Looking back over the past 50 years, gold prices increased by an average of nearly 11% per year, comparable to the returns from US equities and considerably better than US bonds. Gold consistently outpaces inflation, too. In periods of high inflation – when consumer prices are increasing by 5% or more, – gold prices on average have gained over 20% (Chart 1).
Source: Bloomberg, Bureau of Labour Statistics, ICE Benchmark Administration, World Gold Council
Based on y-o-y changes of the LBMA Gold Price, Bloomberg Commodity Index and US CPI between 1971 and 2022. Number of observations for each tranche: Low = 12, Moderate = 22, High = 12. The buckets were determined based on a 2% Fed target rating, a recent CPI number above 5% and a proportional amount of observations in each tranche. The results are consistent when adjusting tranche levels moderately.
Investors want protection in tough times—and historically, this is when gold shines, moving higher when equities and other riskier assets are under pressure. Unusually though, gold can also move higher when these assets are in positive territory. This ability to perform in good times and bad is based on gold’s varied demand and makes it a uniquely efficient asset for an investment portfolio.
Gold can make a material difference to investment portfolios’ returns because portfolios that include gold are less likely to experience extreme highs and lows.
Gold has significantly outperformed the US dollar and other major currencies for decades. In the 21st century alone, major currencies have depreciated by more than 90% against gold and, over the past 100 years, they have lost 99% of their value compared to gold. Simply put, gold helps investors to preserve their purchasing power down the generations.
The gold market is large, global and highly liquid so investors or their beneficiaries can buy or sell gold easily, even when financial markets are under pressure.
For more detailed information on gold products and finding the right gold seller for you, download our full investor guide here.
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Leveraging our broad knowledge and experience, we work to improve understanding of the gold market and underscore gold’s value to individuals, investors, and the world at large.
Collaboration is the cornerstone of our approach. We’re an association whose members are the world’s most forward-thinking gold mining companies. Combining the insights of our members and other industry partners, we seek to unlock gold’s evolving role as a catalyst for advancements that meet societal needs.
We develop standards, expand access to gold, and tackle barriers to adoption to stimulate demand and support a vibrant and sustainable future for the gold market. From our offices in Beijing, London, Mumbai, New York, Shanghai, and Singapore, we deliver positive impact worldwide.
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Diversification does not guarantee any investment returns and does not eliminate the risk of loss. Past performance is not necessarily indicative of future results. The resulting performance of any investment outcomes that can be generated through allocation to gold are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. WGC does not guarantee or warranty any calculations and models used in any hypothetical portfolios or any outcomes resulting from any such use. Investors should discuss their individual circumstances with their appropriate investment professionals before making any decision regarding any Services or investments.
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Information regarding QaurumSM and the Gold Valuation Framework Note that the resulting performance of various investment outcomes that can generated through use of Qaurum, the Gold Valuation Framework and other information are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. Neither WGC nor Oxford Economics provides any warranty or guarantee regarding the functionality of the tool, including without limitation any projections, estimates or calculations.