Perceptions of gold have changed substantially over the past two decades, reflecting increased wealth in the East and a growing worldwide appreciation of gold’s role within an institutional investment portfolio.
Gold’s unique attributes as a scarce, highly liquid, and uncorrelated asset enable it to act as a diversifier over the long term. Gold’s position as an investment and a luxury good has allowed it to deliver annualised returns of nearly 8% since 1971, comparable to equities and more than bonds and commodities.
Gold’s traditional role as a safe-haven asset means it comes into its own during times of high risk. But its dual appeal as an investment and a consumer good means it can generate positive returns in good times too. This dynamic is likely to continue, reflecting ongoing political and economic uncertainty, and economic concerns surrounding equity and bond markets.