|
|
|
Gold Has Outperformed the S&P 500 in the 21st Century | | |
|
According to analysis by the World Gold Council, gold outperformed emerging market stocks, U.S. bonds, the U.S. dollar, global treasuries, and commodities in general. The only asset classes that performed better than gold were U.S. stocks and developed-market foreign stocks. But if we go back deeper in time to 1999, gold has narrowly outperformed stocks on an annualized basis as well. | | | |
|
|
Bonds are even further behind in the race. The iBoxx USD Overall Index, measuring the performance of government and corporate bonds, has charted an average return of 4.1 percent since 1999. Adjusting for volatility, gold has also demonstrated better risk-adjusted returns than stocks in the 21st century, with a Sharpe ratio of 0.48 versus 0.45 for equities. The DJCI reached an all-time high in December, charting a 12.8 percent return. That outpaced both bonds and the broader commodity markets. Equity markets won 2023 with a 26.3 percent return for the S&P500. Gold charted a strong performance in 2023 despite significant headwinds, including a strong dollar and rising interest rates. | | |
Gold is a non-yielding asset. It doesn't pay dividends like many stocks, and it doesn't produce interest income like bonds. That means there is a higher opportunity cost when holding gold in a higher interest rate environment. This is often cited as a knock on the yellow metal, and it certainly impacted gold's performance through the first three quarters of 2023. | | | |
Nevertheless, gold has proven to be a strong addition to an investment portfolio through the 21st century. Luke noted that central banks have taken notice of gold's performance over the long haul. Total central bank gold buying in 2022 came in at 1,136 tons. It was the highest level of net purchases on record dating back to 1950, including since the suspension of dollar convertibility into gold in 1971. That buying spree continued into 2023 with central banks adding another 800-plus tons of gold to their reserves through November of last year. "Gold has historically provided investors an alternative to fiat currency," Luke wrote. "Digging into the central bank purchase data, countries including Russia and China have led the increase in central bank holdings. Foreign central banks appear to increasingly value gold's hedge against inflation, debt default and dollarization." | | |
|
About the Author: Mike Maharrey is a journalist and market analyst for Money Metals Exchange with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida. | |
|
|
This copyrighted material may not be republished without express permission. Offer only available through email promotion. Offer does not apply to previous orders and may not be combined with any other offer or program. Special shipping rates or other restrictions may apply to international orders. The information presented here is for general educational purposes only. Money Metals Exchange and its staff do not act as personal investment advisors. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. While our track record is excellent, investment markets have inherent risks and there can be no assurance of future profits. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing from Money Metals, you understand our company is not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. Money Metals Exchange is not a regulated trading "exchange" as defined by the CFTC and the SEC. | | |
No comments:
Post a Comment