Gold up over 100% in major currencies since financial crisis
Gold up 100% in dollars, 124% in euros and surged 200% in sterling
Gold has outperformed equity, bonds and most assets
Gold remains an important safe-havenin long term
Gold prices from August 9th 2007 to August 9th 2017
It has been ten years since the global financial crisis began to take hold. At the time few would have known that BNP Paribas’ decision to freeze three hedge funds was the signal for the deepest recession in living memory and a near-collapse of the financial system.
As the French bank blamed a complete evaporation of liquidity on its decision the ECB flooded its the market with billions of euros of emergency cash as it worked to prevent a seizure in the financial system.
Very few realised how much the financial and investment landscape was set to change.
In the proceeding decade we have seen unprecedented intervention by central banks which in turn has created a punishing financial landscape for savers and investors.
For those who were unfortunate to experience bank bailouts first hand or a collapse in a housing market, an instant lesson was learnt about the importance of protecting your savings.
That would have been a savvy lesson to learn. Any investors feeling the ripples of the financial crisis and looking to protect their wealth may well have looked to gold as an option. By adding gold to their portfolio they would currently be looking at some extremely healthy returns.
For those who were slower on the uptake of portfolio protection, they still would have benefited from gold’s decade climb and its performance alongside other major asset classes.
Gold’s decade long climb
Gold continues to be dismissed by the mainstream as an important asset-class for investors. However the decade long-climb for the precious metal is example enough of it’s strong performance against a backdrop of financial and political turmoil.
The yellow metal has outperformed a number of key assets and is up at least 100% in major currencies.
Gold price up by over 100% in major currencies
Gold priced in sterling, euro and (US) dollar is up by at least 100%.Gold in a sterling a whopping 200%.
In contrast many major asset classes have not performed to the same extent, or met expectations.
For example, MSCI’s main world equity index might currently be on course for its longest monthly winning streak since 2003, but this is only 22% above levels in 2007.
Plus, as central banks actively stockpiled bonds, yields on 10-year government debt benchmarks have more than halved.
In the decade since the financial crisis gold has been one of the top performing assets. The table below shows the best performing asset classes in the last ten years.
It is clear to see that gold (when priced in sterling) has outperformed the majority of bonds and many equities (when priced in dollar and euro). The precious metal has held its own throughout a decade of financial confusion and distress.
This should come as no surprise to gold investors who are aware of gold’s ability to act as a long-term safe haven during times of crisis.
What is most interesting about the last ten years however is that the mainstream media and politicians are keen to promote the idea that the crisis is over. Yet, in many instances the situation is the same or, arguably, worse.
