Gold protects euro-based portfolios against inflation with 9.1 per cent p.a.

Since 2000 – i.e. for more than 21 years – gold has gained in value an average of 9.1 per cent against the eurozone currency on a yearly basis, thus protecting investors from inflation. The recently published April issue of the “Monthly Gold Compass” which was compiled by commodity experts Ronald-Peter Stöfele and Mark J. Valek on behalf of Incrementum AG, comes to this conclusion. The two authors compared the performance of nine major currencies with that of gold in the respective region.

Gold: proven store of value in many currencies this millennium

In the period from the beginning of 2000 to the end of March 2022, gold protected US dollar investments with an average annual increase in value of 9.2 per cent, i.e. very similar to the eurozone. In Asia, gold also gained significantly against regional currencies every year: by an average of 8.3 per cent against the Chinese yuan, 10.2 per cent against the Japanese yen and even 12.0 per cent against the Indian rupee. Against the pound sterling, gold gained an average of 10.7 per cent over the same period, yet only 6.9 per cent against the Swiss franc.

Significant differences in gold price development year-on-year

On a yearly basis, however, the development of the gold price varied greatly, even within regions. In the eurozone, the gold price ranged from -30.9% to +38.6% per year. Incidentally, the largest increases in gold in Europe were not in the years from 2020 onwards, but in 2010 and 2005. Gold in euro suffered its biggest losses in 2013. Overall, however, it has only performed negatively for five years since 2000, mostly within a tenth of a per cent range. This data proves that gold can also act as a short-term inflation hedge, but not necessarily so. In the long run, on the other hand, gold has proven a store of value, time and again.