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Is Gold Really A Positive Investment Over The Long Run?

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(Kitco News) - When it comes to gold investing, the numbers speak volumes, especially in the long run, this according to data compiled by Telegraph Money.

Just look at the numbers.

“Over the long term it has paid to be gold,” the London-based media outlet wrote Monday.

The analysis, which used data from FE Analytics, compared gold’s performance to the FTSE World index over separate time frames – since June 1999 to today, since the financial crisis, and since the Brexit vote.

What’s more, the analysis looked at four different types of allocations to the FTSE index and gold:

  1. 95% shares, 5% gold
  2. 90% shares, 10% gold
  3. 80% shares, 20% gold
  4. 50% shares, 50% gold

The results?

If investors are willing to stomach the volatility, gold performs best over the longest time frame.

“Gold maintained its price during the technology-fueled stock market collapse of 2000-2003 and then gained further during Iraq war and in response to corporate scandals such as energy giant Enron's collapse. It soared ahead of the FTSE World index when the global financial crisis hit, and posted its biggest gains in the nervy years that followed,” the Telegraph reported.

“Someone in the [5%] gold portfolio would be up [228%] since June 1999 before fees, compared to [321%] for the [50%] gold portfolio.”

However, over the shorter-term cycles – since the financial crisis and since Brexit – investors would have been better off with shares rather than gold, the data showed.

“From September 14, 2008, the day before the collapse of Lehman Brothers, the [5%] gold portfolio has returned [154%], compared to [124%] for the [50%] gold weighting.”

And, since the black-swan Brexit vote that saw the British public vote to leave the European Union, the FTSE World index outperformed gold, the data showed.

“The [50%] gold portfolio returned [17%] over the period, compared to [32%] for the [5%] portfolio.”

However, the report went on to explain that the FTSE likely outperformed gold due to the weakening British pound which boosted “returns from overseas investments.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.