Gold is polarizing: for some it is a safe haven, for others it is an interest-free asset. Even though many investors have recently been happy about the boost in returns, that wasn’t always the case. Pascal Kielkopf’s analysis shows how adding the precious metal to a classic stock-bond portfolio has had a long-term impact.
In his study, the capital market analyst from HQ Trust compares the annual returns of a classic 60/40 portfolio – consisting of 60 percent MSCI ACWI and 40 percent currency-hedged global government bonds – with the development of the gold price. The period under consideration ranges from 1973 to 2025.
The annual returns of gold and the 60/40 portfolio are relatively independent of each other – sometimes in the same direction, but often in opposite directions. Some years, gold rises sharply while the portfolio weakens – and vice versa. This low correlation makes gold a valuable component for risk diversification.
Gold equals negative returns on stocks and bonds in 9 out of 10 cases
Gold fulfilled its role as a crisis metal quite reliably: in nine out of eleven cases in which the 60/40 portfolio was in the red at the end of the year, gold achieved a positive return. The years 1974, 2008 and 2022 were particularly impressive, when the price of gold rose sharply while the 60/40 portfolio recorded losses.
Gold investments are a two-way street
Anyone who looks primarily at the recent past might forget that not every year has been a golden year for investors. There are also years, such as 1975 or 2013, in which gold significantly dragged down portfolio returns. And there were also dry spells: between 1981 and 1999, gold achieved negative returns in many years, while the 60/40 portfolio made solid gains.
Gold is not a guarantee of high returns
Gold is not a replacement for stocks or bonds – and is certainly not a guarantee of consistently higher returns. However, as a strategic admixture, it can help reduce fluctuations and cushion losses in difficult market phases. From our point of view, a gold quota of up to 10 percent in the portfolio seems sensible.
Long-term stabilization effect is crucial
What is important is less the short-term return contribution than the long-term stabilization effect. Anyone who holds gold should therefore not see it as speculation, but rather as insurance against times when classic capital market logic no longer applies.
