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Gold as an investment - statistics & facts

Gold has been revered as a symbol of wealth and prosperity for millennia. It has managed to maintain its value through the ages and - unlike paper currency, coins, or many other assets - it has been a stable way to pass on and preserve the value of wealth from one generation to the next. A central bank or a nation will often hold gold reserves in order to store value as a guarantee to redeem promises to pay depositors or to secure a currency. The United States has the largest gold reserves of any country, amounting to over eight thousand metric tons.

What is gold used for?

The most common purpose behind demand for gold is jewelry, which generally accounts for between one and two thirds of total gold demand. This changed during the first three quarters of 2020 however, with investment driving over half of all gold demand. Of course, this development coincides with the global coronavirus (COVID-19) pandemic – and the economic consequences it generated. As a result, gold prices reached a record of almost 2,000 U.S. dollars per troy ounce at this time. While projections of the price of gold expect it to fall through to 2025, it is predicted to remain above pre-pandemic levels.

Why invest in gold?

Historically, gold has been an excellent hedge against inflation because of its tendency to increase in value when the cost of living increases. This stability also extends to periods of economic downturn, where the price of gold often does not suffer in the same way as shares (and other more volatile financial assets). Gold is therefore seen as a safe haven asset by many in times of crisis. There are a variety of ways that retail investors can invest in gold. One is through physically owning the metal, but this can raise issues around storage – as well as often having a high buy in price. Alternatively, people can invest in investment funds (mutual funds or ETFs) that own a quantity of gold, effectively giving the investor a share of the physical gold stored by the fund. Gold funds top the list of the largest precious metals ETFs, with some managing tens of billions of U.S. dollars worth of gold. Finally, there is also the option of investing in shares of gold mining companies. While it could be argued that investing in stocks does away with many of the benefits of investing in gold, it is also the case that gold mining stocks rose during the pandemic.

Interesting statistics

In the following 5 chapters, you will quickly find the 19 most important statistics relating to "Gold as an investment".

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