Gold Vs Other Assets, 2006-2016

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 £100k invested in 2006.

 

Also on the graph is inflation. £100k invested in 2006 needs to have the same purchasing power as £130k today, due to inflation devaluing currency. This means that any return of less than £130k on a £100k investment is actually a fall in absolute value.

 

  • GOLD: £100k invested in gold in 2006 grew to £286k a decade later, far outperforming inflation and all other assets

 

  • PROPERTY: £100k invested in property nets £117k, under-performing inflation by £13k

 

  • FTSE: A £100k investment in the FTSE 100 ends on £167k, £119 below gold

 

  • BONDS: Bonds track inflation, so no gain in absolute value at all

 

  • SAVINGS: Savings see a very small rise due to interest, but represent 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.

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Gold Vs FTSE 100

The graph above shows an investment in gold of £100k in 2006 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 decade:

 

  • A £100k investment in gold returns £286k

 

  • A £100k investment in the FTSE 100 finishes at £167k

 

The crash of 2008 is seen clearly. It takes several years before the FTSE 100 begins to outperform inflation and start to recover. Even once recovered a gold investment is still is still worth £119k more at the end of the decade.

 

While in 2016 the FTSE 100 ended well, events such as the 2008 crash are not out of the ordinary. Banks including MS, Citigroup and HSBC are predicting a similar equities crash in the coming years, and with Brexit negations proving even more chaotic than expected, there’s no telling how the UK stock market will perform in the next decade.

 

Between 2007 and 2010 gold surged while the stock market weakly recovered after its crash. It is this pattern that makes gold a compelling investment while even the world’s most successful companies are struggling.

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Gold Vs 10 and 20 Year Bonds

The graph above shows gold compared to 10- and 20-year government bonds, based on a £100k investment in 2006. Inflation is also shown on the graph, to demonstrate the amount of growth needed to increase the actual value of the initial investment.

 

  • A £100k investment in gold finishes at £286k

 

  • A £100k investment in bonds tracks inflation, so would not have increased the value of your portfolio

 

10 and 20 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 unstable 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.

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Gold Vs Property

The graph above compares a £100k investment in gold in 2006, 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 £130k. As you can see:

 

  • A £100k investment in gold returns £286k

 

  • A £100k investment in property returns £117k, under-performing inflation by £13k

 

Since Brexit the UK property market has become increasingly unpredictable and many people are starting to lose out. The bubble caused by the super-rich in London looks ready to burst at any moment.

 

Many economists fear that rising UK interest rates may result in a debt explosion where people living on cheap debt can no longer pay for their mortgages, resulting in a run on the property markets as many people sell up and a massive slip in property value.

 

Bank of England stress-test simulations allow for a 30% fall in the value of property, but some experts believe this is conservative.

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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

 

 

  • A physical, tangible asset not directly controlled by banks or governments

 

 

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.

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How to Buy Gold & Silver

  • Consultation

    From one of our dedicated specialists to understand what products are available and relevant to you. The extent of consultation is driven by you and is a good opportunity to ask us as many questions as possible. We listen to your circumstances and are happy to provide tax efficient solutions.
  • Purchase order

    When you feel comfortable and confident and you’ve had all your questions adequately answered you are able to complete a purchase order which is your instruction to purchase metals.
  • Payment

    In order to lock in the price and complete your order you can transfer funds via bank transfer or personal cheque. For smaller orders we may accept debit or credit cards.
  • Storage and delivery

    You can either receive your gold via our complimentary Insured delivery service or have your gold safely stored within a London Bullion Market Association (LBMA) vault whereby your metals are fully allocated, segregated and insured by Lloyds of London.

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