Gold Shines Bright: Report Highlights Benefits of Investing in the Precious Metal

A recent World Gold Council report highlights the benefits of investing in gold compared to other commodities. According to the report, gold has outperformed every major commodity sub-index over a 20-year horizon and has proven to be a more reliable hedge during market crashes.

The report identifies four key differentiators that set gold apart from other commodities: returns, diversification, inflation protection, and liquidity. Gold's unique properties, such as its large aboveground stock and low storage costs, make it less volatile than other commodities.

Gold has also shown a lower correlation with other assets, including equities, during risk-off periods. This makes it an effective diversifier that works when it matters most. The report cites two recent stress tests: the Q4 2018 global equity selloff and the COVID-19 crash in Q1 2020.

Gold not only protected portfolio assets but also delivered positive returns during these periods, while broader commodities behaved more like a risk-on asset. The report further notes that gold is also a more effective diversifier than silver because silver depends to a greater extent on industrial demand.