Gold offers double support for private pensions

It is still relatively uncommon in Germany but order of the day in countries such as the US, the UK, Sweden, Denmark, Australia and Switzerland: private pension plans incorporating stocks, bonds, ETFs etc. to benefit from the generally higher returns compared to traditional forms of saving. Gold should not be missing from such a long-term portfolio – for two reasons.

Improving risk-adjusted portfolio performance

As various studies have shown, most recently that conducted by management consultants Mercer Germany in 2024, a gold allocation of just 5 per cent can improve the risk-adjusted performance of a typical equity/bond portfolio. Thanks to its neutral correlation to equities and bonds, which turns negative in times of crisis, gold shines as a portfolio stabiliser. In the event of turbulence on the capital markets or geopolitical crises, the precious metal can counteract weakening share prices and thus mitigate losses in investor portfolios.

Gold itself is a long-term yield generator

Less experienced investors, but also financial professionals such as Warren Buffet, regularly criticise the precious metal for not paying interest or dividends, unlike shares or bonds. While this is of course true, it is a disadvantage generally compensated in the long run by the increase in value of the precious metal. Two examples from recent history: over the course of this year alone, the price for one gram of gold has risen from 60.59 € on 2 January 2024 to 72.70 € on 21 August, a performance of some 19 per cent, thus rendering gold one of the most profitable asset classes of the year. Since the introduction of the euro on 1 January 2002, the price of gold has increased sevenfold, making a strong contribution to the performance of investor portfolios over these 22.5 years.