The Case for Gold in Crises
Gold May Provide a Safe Haven† During Crises
The current crisis began in early 2022 with Russia’s invasion of Ukraine, and has continued into 2024 with the escalation of the Middle East crisis. As with past crises, gold has provided a safe haven investment compared to more traditional asset classes, like stocks and bonds, as shown in the table below.
Gold vs. Stocks and Bonds
During the seven crisis periods since 2007, we believe gold has demonstrated its value as a safe haven† asset. On average, for the seven periods, gold bullion has returned 14.70% compared to -8.83% for the S&P 500 Total Return Index and 4.47% for U.S. Treasuries (as of 6/30/2024).
Table: Performance of Gold Bullion vs. S&P 500 Total Return Index and U.S. Treasuries in “Crisis” Periods* (2007-June 30, 2024)
Bar Chart: Performance of Gold Bullion vs. S&P 500 Total Return Index and U.S. Treasuries in “Crisis” Periods* (2007-June 30, 2024)
† A safe haven is a type of investment that is expected to retain or increase in value during times of market turbulence, but this should not imply investment protection. There is no guarantee investments will maintain value during periods of market volatility.
* The beginning and ending periods selected are our best estimate of the highest impact periods of each crisis and does not necessarily indicate the exact beginning or ending of the specific crisis event. This information is presented for illustrative purposes only. Data as of 3/31/2024. Source: Sprott Asset Management, Bloomberg. Dates used: Global Financial Crisis: 10/11/2007-3/6/2009; Eurozone Crisis: 4/20/2010-7/1/2010; U.S. Sovereign Debt Downgrade: 7/25/2011-8/9/2011; China Yuan Devaluation: 8/18/2015-2/11/2016; Fed Rate Hike & China Trade War: 9/20/2018-12/24/2018; COVID-19 Pandemic: 12/31/2019-12/31/2020; Russia-Ukraine War: 2/24/2022-3/31/2024; Israel-Hamas War: 10/7/2023-3/31/2024. S&P 500 TR Index is measured by the SPXTR; U.S. Treasuries are measured by Bloomberg Barclays US Treasury Total Return Unhedged USD (LUATTRUU); and Gold Bullion is measured by spot gold (Bloomberg GOLDS Comdty).
†† The Trusts are closed-end funds established under the laws of the Province of Ontario in Canada and are available to U.S. investors by way of listings on the NYSE Arca pursuant to the U.S. Securities Exchange Act of 1934. The Trusts are not registered as investment companies under the U.S. Investment Company Act of 1940.
Important Disclosure
Past performance is no guarantee of future results. You cannot invest directly in an index. Investments, commentary and statements are that of the author and may not be reflective of investments and commentary in other strategies managed by Sprott Asset Management USA, Inc., Sprott Asset Management LP, Sprott Inc., or any other Sprott entity or affiliate. Opinions expressed in this commentary are those of the author and may vary widely from opinions of other Sprott affiliated Portfolio Managers or investment professionals.
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