Comparing the Returns of Gold, Stocks and Bonds by Decade

Gold has had an excellent run so far this year. The yellow metal is up over 28% year-to-date as investors pile into it as a hedge against risky assets and uncertainties brought by Covid-19. In general, gold as an asset class performs well when stocks and bonds do not.

I recently across an article by Matthew A. Young at Young Investments where he discussed the performance of gold over stocks and bonds in the past few decades. From the article:

Like many financial assets that have risen over the long run, the 50-year price explosion in gold hasn’t been a straight line. Gold has compounded at 8.5% since August 1971, which compares favorably to stocks and bonds; but as the table below shows, gold has also experienced long dry spells.

The 1970s were gold’s best decade, with the price compounding at more than 35%. Over the next two decades, gold was down in price. During the 2000s, gold prices soared again, rising at a compounded annual rate of over 14%. During the 2010s, gold didn’t perform as well as it did during the 2000s, but it kept pace with inflation and edged out bonds.