Gold was one of the best-performing asset classes in 2023

It is common knowledge that gold performs best in times of economic or geopolitical crises. In 2023, the precious metal performed well in the US, gaining over 13 per cent, while rising 9 per cent in the Eurozone. This is remarkable not only because of the inhibitive interest rate policy of both the Fed and the ECB, but also in view of the fact that the stock markets in the US as well as the Eurozone soared over the same period.

Stock markets in industrialised nations and gold recorded strong gains in 2023

The S&P 500 stock index, which tracks the 500 largest US listed industrial companies, rose by a whopping 26.3 per cent in 2023, while the EURO STOXX 50, tracking the performance of the 50 largest European companies, had risen 19.19 per cent by the end of the year. Many other benchmark indices of industrialised nations also developed strongly, outperforming Gold. According to the World Gold Council, the situation was different for EM stock indices, which were unable to keep pace with US gold, at an average increase in value of less than 10 per cent. Yields on US Treasuries were significantly lower at an average of 6 per cent, as were other government bonds (global ex-US) at an average of 4 per cent. Commodities lost a total of almost 8 per cent in value in 2023.

To date, gold has outperformed the S&P 500 in the 21st century

At the turn of the millennium, the price per ounce of gold in the US was US$283. At the beginning of this year, gold was trading at US$2,077 – more than seven times higher. The precious metals portal Gold Eagle compared the performance of the S&P 500 with that of the Dow Jones Commodity Index Gold (DJCI), which tracks the US gold price using the Gold Futures Index. While the DJCI has recorded an average gain of 7.8 per cent p.a. since the beginning of 2000, the S&P 500 has only achieved an average return of 7 per cent p.a.