The World Gold Council (WGC) has announced that gold has provided a significant return above inflation in the long term over the past 50 years, consistent with global Gross Domestic Product (GDP).

The World Gold Council has released a report titled “Long-Term Return Expectations of Gold.” The report stated that gold’s contribution to managing portfolio risk and its ability to preserve value have been well established through numerous studies. While the report noted that the contribution of gold to portfolio returns has not been similarly well-established, it also mentioned that “there are frameworks for estimating the long-term return of gold, but they lack a solid approach that is consistent with capital market assumptions for other asset classes.”

“THE ‘GOLD AS A STORE OF VALUE’ APPROACH HAS SHORTCOMINGS” The report highlighted that research on return expectations of gold has identified the commodity as a “store of value,” but also emphasized that this approach has certain shortcomings. The report cautioned against relying on data from periods when the gold standard was in place, as this could lead to misleading conclusions about gold’s performance. Additionally, it pointed out that focusing solely on demand from financial markets in assessing long-term prices could create a misconception that gold has a lesser weight in portfolios.

“GOLD DELIVERED RETURNS ABOVE INFLATION IN THE LAST 50 YEARS” The report presented a new approach to calculating the long-term returns of gold, revealing that in the past 50 years, gold has provided a significant return above inflation, in line with global GDP. The report highlighted that the support for gold purchases from jewelry and technology sectors, central banks, financial investments, retail bullion, and coins exceeds what current theories suggest. It also stated, “Furthermore, while financial market investors tend to influence short-term price formation, they are less dominant in the long run.”