Gold investment research
Our statistical analysis examines how gold acts as a portfolio diversifier, vehicle for risk management and store of value. To explore our range of reports and publications, visit our Investment research library or review our featured publications below.
In this eighth edition of Gold Investor, we take a closer look at gold’s performance and its relevance for investors in the current environment. In particular, we explore:
- Gold in a rising dollar environment: Generally, there is an inverse correlation between gold and the dollar. However, our analysis shows that the gold price increases more when the dollar weakens than it falls when the dollar strengthens. In our view, the dollar’s relationship with gold has changed dramatically over the past decades and is likely to shift further as demand moves East and the world moves to a multicurrency system.
In addition, we review:
- Interconnections: the factors that drive gold: A useful framework to help investors understand gold’s performance.
- The market may be wrong about gold and US interest rates: Many investors believe that a rise in real US interest rates will certainly be bad for gold. Our analysis shows that other factors – some positively correlated to the economic growth that often accompanies rising rates – can have more influence on the gold price. We also highlight gold’s benefits in a portfolio at a time when stocks and bonds may deliver lower-than-average returns in coming years.
The most recent edition examined gold’s performance during the first three quarters of 2014, exploring relevant macroeconomic factors that might have influenced gold’s performance in Q4 2014. This was published in October 2014.
In our view, there are four main reasons investors should view gold as a valuable portfolio component today:
- Positive economic growth is supportive of gold’s long-term demand
- Rising interest rates do not necessarily push gold prices down
- Gold’s cost effectiveness makes it an attractive portfolio hedge compared to other strategies
- Constraints in mine production and falling gold recycling have kept the market in balance.
Previous issues of Investment Commentary:
Previously published research
The World Gold Council's investment research provides investors and industry analysts with indepth insights on:
- the unique investment properties of gold as a portfolio diversifier and store of wealth
- the underlying market dynamics and gold's growth drivers
Gold, the renminbi and the multi-currency reserve system
Gold as a strategic asset for UK investors
Gold as a strategic asset for European investors
Gold: alternative investment, foundation asset
The impact of inflation and deflation on the case for gold
Gold: a commodity like no other
Liquidity in the global gold market
Gold: hedging against tail risk
Gold performance analytics
Our analysis for each country includes domestic equities, regional equities (in the case of Europe), international equities (ex-Europe) and international bonds (both in domestic currency terms). For bonds, we use the Barclays Capital Aggregate/Bond Indices, a series of market capitalisation weighted bond indices. Country files contain: Price performance, volatility, 3- and 5-year correlation matrices, rolling correlation chart, rolling volatility chart, exchange rate effect chart, gold and local equity index price chart.
One area is devoted to comparative analysis of commodities.
Please refer to our notes on methodology for further details.