The Power of Gold

Why investors turn to gold

Gold offers a uniquely versatile investment opportunity due to its dual role as both a consumer good and an investment asset. This allows it to provide strong diversification during times of financial instability, while also capitalizing on increased demand for jewellery and technology in periods of economic growth.

It is a solid, tangible asset that acts as a buffer in volatile times. By incorporating gold into your investment strategy, you ensure that your wealth is not only preserved but also poised for future growth, offering peace of mind in uncertain times.

Diversify Your Portfolio Like a Pro

Diversification is the hallmark of smart investing. Gold offers a unique opportunity to diversify since it normally moves inversely to the stock market. When equity markets go down, gold prices often rise. This inverse correlation makes gold a strategic hedge that reduces the volatility of risk in your overall investment portfolio. By adding gold, you are not only spreading the risk but also actively securing your future.

How gold and commodities tend to move relative to US equities

Source: Bloomberg, ICE Benchmark Administration, World Gold Council

Note: Returns based on the LBMA Gold Price PM for gold, the S&P 500 Index (including dividends) for US equities, and the Bloomberg Commodity Total Return Index for commodities using data from December 31, 2003, to December 31, 2023.
Periods when US equities are down significantly are defined as weeks when the S&P 500 Index falls by at least 2.5% or one standard deviation – a commonly used metric to determine unusually large market swings.

Average annual return of gold and other assets worldwide 1971-2024

Data Source: Statista Research Department

Between January 1971 and March 2024, gold had average annual returns of 7.98 percent, which was only slightly behind the return of commodities, with an annual average of eight percent. The annual average return of gold in 2023 was 13.1 percent.

Long-Term Returns You Can Count On

During the last decades, gold has been giving solid returns and hence is one of the favorite assets among expert investors. From 2019 up to 2024 alone, gold emerged with steady growth, gaining even against conventional investment vehicles. Besides these gains, it's not just about price spikes during crises; they represent a long-term trajectory that has made gold one of the most reliable assets for wealth growth.

Protect Yourself Against Inflation

One of the best attributes about gold is that it retains value during periods of inflation. As central banks increase the supply of money and thus inflate away the purchasing power of paper currency, the price of gold tends to increase. By holding gold in your portfolio, you protect your assets from the erosion of inflation and ensure that your wealth can grow or at least stay level while the prices of goods and services rise.

Liquidity and Global Demand

Gold is widely known, and unlike other assets, it can easily be turned into cash if the need arises. Physical or in a fund, given the universal appeal of gold, there is always a buyer for it. In fact, it makes it not only a store of value but also liquid to provide one with flexibility toward his wealth when needed.

Sources: ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, World Gold Council; Data as of 30 June, 2024

This is a comprehensive time series of gold demand – broken down by sector and country from 2010 to 2023. Gold’s diverse uses, in jewellery, technology and by central banks and investors, mean different sectors of the gold market rise to prominence at different points in the global economic cycle. This diversity of demand and self-balancing nature of the gold market underpin gold’s robust qualities as an investment asset.

A Hedge Against Currency Depreciation

To investors in countries with volatile currencies, such as emerging markets, gold is a very good hedge. When your local currency becomes weak, the global landscape of gold, quoted in U.S. dollars, will appreciate in value, thus allowing you to protect and even accumulate wealth in international terms. That probably makes it a necessary ingredient in every international investment portfolio.

Financial Freedom & Preservation of Wealth

Gold has been synonymous with wealth and security over the centuries and still grants one financial freedom today. In investing in gold, you go a step ahead to preserve your wealth for future generations. You secure your wealth from the risks of inflation, currency depreciation, and economic decline. The track record maintained by gold over time ensures that your financial future is secured despite the market conditions.