Gold outperforms inflation over last 50 years

The World Gold Council (WGC) has announced that gold has significantly outperformed inflation over the past 50 years, providing returns in line with global gross domestic product (GDP).

In its report titled “Long-term Return Expectations for Gold,” the WGC highlighted that gold’s role in managing portfolio risk and preserving value is well established and supported by numerous studies. However, the contribution of gold to portfolio returns has not been equally well defined.

The report points out that while there are frameworks for estimating gold’s long-term returns, these approaches often lack the robust alignment with capital market assumptions that exist for other asset classes.

Gold recognized as ‘store of value’

The WGC’s research reveals that gold has been widely recognized as a “store of value,” but some flaws in this approach were also noted. The report emphasized that using data from periods when the “gold standard” was in effect can lead to misleading conclusions about gold’s performance.

A new approach presented in the report shows that over the last 50 years, gold has delivered returns significantly above inflation and in line with global GDP.

The report also highlights that gold purchases supported by the jewelry and technology sectors, central banks, financial investments, and retail bullion and coins are far more substantial than existing theories suggest. It further stated that while financial market investors tend to influence short-term price movements, their impact is much less dominant in the long run.