Gold's unique attributes as a scarce, highly liquid, and uncorrelated asset demonstrate that it can act as a diversifier over the long term. Gold's position as an investment and a luxury good has allowed it to deliver average returns of nearly 11% over the past 50 years, comparable to equities and more than bonds and commodities. Overall, extensive analysis suggests that adding between 2% and 10% of gold to a U.S.-dollar-based portfolio can make a tangible improvement to performance and boost risk-adjusted returns on a sustainable, long-term basis.
The gold market is more liquid than several major financial markets, including U.S. Treasury Bills, euro/yen and the Dow Jones Industrial Average, while trading volumes are similar to those of the S&P 500 Index. Gold's trading volumes average approximately US$180 billion per day in 2020.
One-year average trading volumes of various major asset classes in U.S. dollars.*
Source: The World Gold Council. *Average daily volumes from 12/31/2010 to 12/31/2020, except for currencies that correspond to March 2019 volumes due to availability. ** Gold liquidity includes estimates of OTC transactions and published statistics on future exchanges, and gold-backed exchange traded products.
Sprott Physical Bullion Trusts
Raising the bar in precious metals investing
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