Like most market-based investments, the price of gold gyrates in all directions. So how has it performed over the last ten years? If you invested $1,000 in gold a decade ago, how much would it be worth today?
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How $1,000 in Gold 10 Years Ago Looks Today
Ten years ago, the price of gold sat at $1,246 per ounce. Today, it’s worth $2,350.65 per ounce. That marks an 88.66% increase in value, or an average annual return of 8.86% (not calculated for compounding).
If you had invested $1,000 in gold a decade ago, it would be worth $1,886.56 today. That’s not a bad return. But how does it compare to, say, an investment in stocks?
The S&P 500 rose 174.05% over the last ten years, for an average annual return of 17.41%. And that says nothing of its dividend yield over that time.
Consider too that as volatile as the S&P 500 is, gold’s returns have varied even more in modern history.
Gold’s Uneven History
When Richard Nixon severed the dollar from gold backing in 1971, the price of gold suddenly started floating at market rates. It consequently skyrocketed over the rest of the 1970s, delivering an average annual return of 40.2%. Then the 1980s hit, and the gold party screeched to a halt. From 1980 through the end of 2023, gold notched an average annual return of just 4.4%. Gold lost value in most years in the 1990s, for example.
Gold doesn’t work like other investments. Traditional investments like stocks and real estate work because they generate revenue. Investors measure that revenue, and assess the likelihood of future revenue growth, and put a value on the investment based on it.
Gold doesn’t produce revenue. In fact, it doesn’t “do” anything. It sits there and looks pretty. Which may not mean much when the rest of the economy hums along healthily, but it can become plenty meaningful when a wrench gets thrown in the gears.
Why Investors Look to Gold
Many investors consider gold the ultimate safe haven investment. When “the world goes to hell in a handbasket,” investors turn to gold.
Why? Precisely because it’s been used as a store of value for millennia.
Investors like gold as a hedge against geopolitical uncertainty. If global markets and supply chains look like they might get disrupted, investors flock to gold. In 2020, for example, gold jumped 24.43%.
Likewise, investors retreat to gold when fiat currencies lose value fast to inflation. Amidst all the inflation anxiety in 2023, gold rose 13.08%.
Finally, gold offers a non-correlated hedge against stock market crashes. In other words, gold offers diversification — a collapse in financial markets doesn’t cause a collapse in gold prices. Quite the opposite: many investors believe gold will rise in price if a bear market hits.
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So, is gold a “good” investment? It’s a defensive investment. Don’t expect it to generate the same returns as stocks or real estate, or pay any cash flow. But when the zombie apocalypse comes, gold will have value, even if no other investments do.
This article originally appeared on GOBankingRates.com: If You Had Invested $1,000 in Gold 10 Years Ago, Here’s How Much Money You’d Have Today
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