Gold as an Investment: a source of return

Often, investors view gold as an investment asset to hold when risk is high and to sell when the economy booms. But economic growth has a positive effect on gold consumer demand - the lion’s share of annual demand.

Our research shows that investors rely on gold during periods of market uncertainty, pushing demand up when inflation spikes or when the stock market tumbles. This generally influences gold prices in the short- and medium-term. However, one of the most important long-run drivers of gold is positive income growth. An expanding global middle class has translated into a source of positive momentum for gold demand.

Gold, as an investment, has delivered positive returns over the long run, often outperforming major asset classes.

*Based on local returns indices including MSCI US, MSCI ACWI ex US, JPMorgan 3-month US cash, BarCap US Bond Aggregate, Bloomberg Commodity for the 10- and 20-year average, and S&P Goldman Sachs Commodity since 1971 due to data availability. Gold performance based on the LBMA Gold Price Data between January 1971 and December 2016.
Source: Bloomberg, NBER, ICE Benchmark Administration, World Gold Council