Make Kitco Your Homepage

If you invested $10K in gold in 2009, where would you be?

Kitco News

Editor's Note: 2020 is expected to be another year of significant uncertainty and turmoil. But the question is what asset will emerge the victor when the dust settles from the global trade war, Brexit, recession threats, negative bond yields. It’s a showdown of global proportions, so don’t miss all our exclusive coverage on how these factors could impact your 2020 investment decisions.

(Kitco News) Gold is wrapping up the year on a very strong footing, but how has the metal performed during this last decade and how much profit would you have made if you invested $10,000 in gold back in 2009?

Gold had a good year, rising around 18% during the last 12 months, after marking a six-year high of $1,571 back in September. Spot gold started off the year around $1,282 an ounce and is ending 2019 at above $1,480.

However, the last decade as a whole was not a straight line of gains. The precious metal saw a very volatile 10-year period, with prices rising to all-time highs of $1,921 in 2011 and falling below $1,100 in 2015.

“We can say quite safely that gold has been fairly volatile here. We went through a whole gamut of experiences. We went up in 2010 from a low of $1,044. And then we almost doubled within just slightly over a year as we peaked at $1,921 in 2011. Then we plunged again towards $1,066 and now we are at $1,480,” TD Securities head of global strategy Bart Melek told Kitco News.

Perception of risk and global monetary policies have been the primary drivers of gold during the past decade, Melek added.

“There has been a lot of movement over the last decade in this asset class and very much driven by our perception of risk and very much monetary policy, which has been the main factor driving gold here,” he said.

The last decade saw the markets coming out of the economic crisis and the global monetary policy response to that crisis, said Mitsubishi analyst Jonathan Butler.

“We’ve come out of a period of economic crises — 2009-2010 period. The monetary policy followed that. On the one hand, that would be expected to support gold in terms of keeping interest rates low, what actually happened was that it filled a flight into risk assets. So, equities did pretty well while gold remained fairly subdued for some of that time,” Butler said.

“We saw a big spike up in 2011, which was related to the eurozone concerns. Since then, in the last four or five years up to this year, gold was on a downward trend. At the end of quantitative easing in 2013, gold went from $1,800 to about $1,100 over a three- or four-year period,” he pointed out.

The last three years saw a nice recovery in gold, with 2016 and 2019 standing out as the two most bullish years since the 2011 peak, Butler added.

“The last three or four years, we’ve definitely seen some upside. Started in 2016 and once again came back very strongly in 2019 as rates started to be cut again in the U.S. Generally speaking, the performance of gold is still positive if you look at the ten-year period as a whole. But, realistically we’ve only come from maybe $1,150 to $1,480 right now. So, not a huge degree of appreciation over that time,” he said.

So, where would your $10,000 investment be if you bought the precious metal in 2009?

If we take gold spot price from December 1, 2009 — $1,179.22 an ounce —and compare it to December 1, 2019 price of $1,464.02, your $10,000 investment would have risen by $2,415 and now total $12,415 — not accounting for inflation and the U.S. dollar fluctuations.

Overall, spot gold rose 24.15% from December 1, 2009 to December 1, 2019. Back in 2009, an investor could have purchased 8.4802 ounces of gold with the $10,000 investment, which now buys only 6.8305 ounces.

Below is the chart that compares gold’s performance during the last decade with other precious metals.

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.