25 JANUARY 2024
Gold bullion can be an extremely emotive asset. Some investors label it a useless “pet rock”. Others view it as the ultimate store of value.
Looking at it more objectively, there have been few better performing markets than gold over the past 5 years, at least in risk-adjusted terms. As of 31st December ’23, it had produced an annualised gain of 10% (in U$ terms) with a maximum drawdown of 21%. The FTSE All-World equity index has produced a slightly better return of 12% p.a. but with two approx. 30% drawdowns.
Despite its recent strength, the chart below suggests the outlook for bullion (and other precious metals) remains positive because, historically, the end of Fed rate hike cycles have sparked substantial gains in the gold price. These have ranged from 50-60% at the end of the 2000 and 2019 cycles to a near 200% surge between 2007 and 2011.
It will no doubt remain a controversial and, at times, frustrating investment but gold looks set to break out to much higher levels over the coming years.
The content of this communication is for information purposes only. Bentley Reid believes that, at the time of publication, the views expressed are a matter of opinion but cannot guarantee replication of depicted performance. Viewers intending to take action based upon the content of this communication should first consult with the professional who advises them on their financial affairs. Capital invested will be at risk, and you may get back less than you invest. Neither the publisher nor any of its subsidiaries or connected parties accepts responsibility for any direct or indirect loss suffered by a recipient as a result of any action or inaction, in reliance upon the content of this communication.
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