The Pure Gold Company has gathered the numbers and they are clear: gold outperformed all other asset classes in the last decade, despite being known primarily as a “safe haven” investment.
GOLD VS ALL ASSETS
This graph plots gold against other assets, based on an average return on invest from £10k invested in 2000.
Also on the graph is inflation. £10k invested in 2000 needs to have the same purchasing power as £15,500 today, due to inflation devaluing currency. This means that any return of less than £15k on a £10k investment is actually a fall in absolute value.
- GOLD: £10k invested in gold in 2006 grew to £77k two decades later, far outperforming inflation and all other assets
- PROPERTY: £10k invested in property nets £32,700, out-performing inflation by £17k
- FTSE: A £10k investment in the FTSE 100 ends on £24,500, below gold.
- BONDS: £10k invested in 10-year government bonds increased to £19,700.
- SAVINGS: Savings increased to £12,400, a small rise but below inflation so a fall in absolute value.
When demonstrated like this gold’s power as an investment medium is clear. And with global uncertainty continuing on its current trend, the outlook for gold continues to be very strong.
GOLD VS FTSE 100
The graph above shows an investment in gold of £10k in 2000 plotted against the same investment in the FTSE 100, a collection of the largest companies on the London Stock Exchange. Inflation is also shown. At the end of the 2021:
- A £10k investment in gold returns £77k
- A £10k investment in the FTSE 100 finishes at £24,500
The crash of 2008 is seen clearly. It takes several years before the FTSE 100 begins to outperform inflation and start to recover.
The intervening decade after the crash saw the FSE 100 recover, catch up to and outperform inflation, before sliding again at the start of the pandemic. Meanwhile, between 2007 and 2010 gold surged while the stock market weakly recovered after its crash. There followed some years when even lower gold prices averaged better returns than the stock market, and then the two diverge substantially again at the start of the pandemic, when gold surged as stocks fell.
GOLD VS 10 YEAR BONDS
The graph above shows gold compared to 10-year government bonds, based on a £10k investment in 2000. Inflation is also shown on the graph, to demonstrate the amount of growth needed to increase the actual value of the initial investment.
- A £10k investment in gold finishes at £77k
- A £10k investment in bonds finished at £19,700.
10 year bonds are a well-known option for longer term investment. They are valued as they provide income above that of savings, from interest paid out regularly to investors. In terms of wealth protection they are far less risky than equities. But the gulf between their returns and gold’s are obvious.
Bonds remain tied to government banking systems and are affected by the global economy. Even governments can default on loan repayments during a crisis. This was seen during Greece’s financial meltdown: when yields soared to unsustainable levels, bond holders lost out.
GOLD VS PROPERTY
The graph above compares a £10k investment in gold in 2000, and the same investment in property. Also on the graph is inflation. In order to actually increase spending power, a £100k initial investment would have to return £15,500.
- A £10k investment in gold returns £77k
- A £10k investment in property returns £33,500, under-performing inflation by £13k
The UK property market since the turn of the century has had its share of volatility. The financial crisis caused a major property slump and the market has spent many years recovering from the decline. The pandemic brought its own hiatus when property was unable to change hands during lockdowns, and there has been come artificial buoyancy due to a lengthy stamp duty holiday designed to return the market to health.
While interest rates have been so low for so long, inflation is running far higher than the Bank of England target of 2% and a rate rise is likely, even if new Coronavirus variants push these out a little way. Rate rises, job insecurity and inflation are all pressure points for the housing market, and could cause a glut of property and a deflation of the current heady market.
INVEST IN GOLD WITH THE PURE GOLD COMPANY
The Pure Gold Company recommends gold for a variety of reasons:
- Consistent value thanks to its rarity
- A proven asset in times of uncertainty and crisis
- Certain kinds of gold investment are tax efficient
- A physical, tangible asset not directly controlled by banks or governments
- Read more reasons to invest in gold
For more information on investing in physical gold to preserve your wealth, contact The Pure Gold Company today and speak to one of our advisers. We will be on hand to guide you to the best method of gold investment, given your individual needs.
HOW TO BUY GOLD & SILVER
Our Simple 4-step process makes physical gold and silver buying easy.
Q & A
One of our dedicated specialists will work with you to answer any questions you have. We will provide you with factual information (benefits / drawbacks) about all available products. The length of this conversation is down to you and is an opportunity to ask us as many questions as possible. Please note we are not permitted to provide any financial advice. If you require advice, we suggest you speak to a financial advisor.
When you feel confident that you’ve had all your questions answered, you will be asked to complete a purchase order, which is your instruction to purchase metals.
In order to lock in the price and complete your order, you must then make a payment, via bank transfer or personal cheque. We no longer accept any payments over the phone / card payments.
STORAGE AND DELIVERY
We can either deliver your gold directly to you, via our insured delivery service, or you can choose to have your gold safely stored, in a London Bullion Market Association (LBMA) vault, where your physical metals are allocated in your name and with full insurance provided.