Gold sets new benchmarks. It beats inflation by a factor of two
07. 03. 2024Gold’s star is shining bright, and its price is soaring. So, it not only continues to defend against the effects of inflation and uncertainty on behalf of its investors, but also earns them long‑term profits. It is proving once again why it has been a safe haven for money for centuries.
The benefits of gold are undeniable. It provides investors with a stable place to park their money during times of uncertainty, inflation and crisis. Additionally, it is an asset that offers long‑term returns.
Let’s take a look at an example. Measured since the beginning of the year, the performance of gold (i.e. the return for the investor expressed as a percentage) is close to 4.5% in Euros. Long‑term investors must be even happier. If we plot performance since the onset of the crisis triggered by the Coronavirus pandemic in 2019, we can see that investing in gold has garnered a return of 81% to date.
And while inflation has eroded savings kept under the mattress and in savings accounts, those who invested in gold protected their savings and actually witnessed them grow. This is because over the last five years, the inflation rate in the Euro area has come to “just” 19%.
What does that mean in practice? People who had the foresight to invest EUR 10,000 in gold at the beginning of 2019 are sitting on a small fortune of EUR 18,093 this year. Their investment has comfortably offset inflation. And that’s not all! It has also yielded a very impressive real return.
Performance of gold versus inflation, 2019-2024
(Source: Eurostat, IBIS InGold)
The bottom line is that gold has once again demonstrated its ability to reliably guide its owners through a crisis, enabling them to emerge from it stronger than ever. Gold is a powerful portfolio diversifier that protects other assets, significantly outperforms inflation – even when it is high – in the long and medium term and delivers impressive long‑term appreciation.
What more could you want? When we consider the ongoing geopolitical turmoil, the trend in interest rates, overall household and sovereign debt, and the likelihood of further gold purchases by central banks, the price of gold could rise above its current highs several more times this year and in the years ahead. The way has been cleared for gold to continue breaking through barriers, and those who choose to join this journey will be rewarded with a stable and prosperous future.
In a nutshell: All indications suggest that gold will continue to rise, and those who buy early will secure a long‑term safe investment with a highly profitable and, most importantly, stable return.
