Key Takeaways Investors have long been in love with gold, and its price has increased substantially over the past 50 years. Like most commodities, supply and demand are incredibly important, but gold also retains additional value. The short answer is yes, gold increases in value. It has been shown to be a more stable investment than the stock market over longer periods of time and, at least, it retains its intrinsic value if it does not increase.
There is an obvious lack of supply of gold right now, global indebtedness is close to historic highs, geopolitical uncertainty is substantial, and Russia has begun to readopt a form of gold standard. For example, over certain 30-year periods, stocks have outperformed gold and bonds have performed similarly, but over some 15-year periods, gold has outperformed stocks and bonds. In all investment portfolios, diversification is important, and investing in gold can help diversify a portfolio, usually in the event of market crashes, when the price of gold tends to rise. Before the Gold Reserve Act, President Roosevelt required citizens to hand over gold bars, coins and banknotes in exchange for U.
At the same time, the total amount of paper gold (exchange-traded funds (ETFs), gold contracts, futures, options, etc. Therefore, in the long term, stocks appear to outperform gold by approximately 3 to 1, but over shorter time horizons, gold can win. To get a historical perspective on gold prices, between January 1934, with the introduction of the Gold Reserve Act, and August 1971, when President Richard Nixon closed the United States, gold prices can be extremely volatile and that means that gold is not a fully stable investment.
