Since the U.S. abandoned the gold standard in 1971, gold has delivered impressive 8.4% annual returns, nearly matching the 9.2% from global equities. Even more striking, gold has outperformed stocks since 2000, returning 10.1% annually versus 5.9% for equities.
Gold’s true value lies in its diversification power – it moves independently from stocks and tends to perform best when equities struggle. During seven major stock market crashes since 1970, gold posted positive returns in six cases, averaging 17% gains. A balanced portfolio of 50% stocks and 50% gold would have outperformed either asset alone with less risk.
As governments print money and deficits soar, gold protects against currency debasement and inflation. Central banks are aggressively buying gold to diversify their reserves, providing strong price support. Unlike volatile cryptocurrencies, gold offers proven stability backed by thousands of years of history.
While gold is 25% more volatile than stocks and produces no income, its liquidity, crisis protection, and inflation-hedging properties make it a valuable portfolio component worth serious consideration.