Is Gold a Long-term Investment?

15th May 2018 

 

If you look at gold investment returns over longer time periods, then yes, however, it appears that the yellow metal has largely tended to be outperformed by equity markets. In the 20-year period from 1996 through 2015, for example, the S&P 500 and FTSE 100 stock indices delivered returns of 382% and 237% respectively. Gold, meanwhile, returned 174%. Looking at even longer time periods only further emphasises this divergence. This suggests that only investing in gold and not investing in other markets, over long periods of time, may not be the most ideal option.

However, it’s more than just the mere numbers that makes gold such a desirable option. It provides some of the most effective protection against portfolio losses that’s available to investors. When things turn sour, gold habitually provides itself as one of the best insurance policies available.

As such, the evidence strongly suggests that it makes sense to own gold, but preferably as part of a well-diversified investment portfolio. This allows investors to continue taking advantage of the rallies in other markets, while the gold ownership will limit losses – or even continues offering gains – when those other markets head south.

So, if you’re thinking about investing in gold, be sure to know the specific scenarios in which it provides the most utility.

 

*At the time of publication this information is correct. Please note we are unable to provide financial advice, so we recommend that you speak with a financial advisor regarding your options. 

 

 

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