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Gold ranks highest among the best-performing global assets of 2024, favored by central banks and private investors. In 2024, gold’s value as a “safe-haven” asset continues to grow amidst global economic crises. Only 10.8% of Americans currently own gold, but there’s an increasing interest among millennials. As inflation and recession rise, gold remains a strong hedge against economic uncertainty.
Key Insights
Gold prices have increased by 30% since the start of the year in 2024.
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The spot price of gold rose 12.7% year-to-date in 2024, while the current price of gold is at an all-time high of USD $2,753.38 per troy ounce as of October 2024.
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Between January 1971 and March 2024, gold had an average annual return of 7.98%. In 2023, the average yearly return on gold was 13.1%.
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Central banks increased gold holdings by 14% in the first nine months of 2023, while gold-based ETFs decreased by 189 tons.
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Global gold production totaled 3,000 metric tons in 2023.
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Gold vs. S&P 500
Over the long term, the stock market and the S&P 500 outperform gold. Over shorter terms, particularly during periods of uncertainty, gold may have higher returns than stocks. In December 2023, U.S. stocks had an average 10-year return rate of 12.75%, while gold only returned 4.57%.
Let’s say you had $100 to invest in 1928:
- If invested in the S&P 500, it would have been worth $787,018.53 in 2023.
- If invested in gold, it would only have been worth $10,042.68 in 2023.
Gold is a particularly valuable hedge during times of crisis. For instance, during the 2007 bear market, the overall stock market plunged 33% while gold only fell 2%.
When the stock market bottomed out in March of 2020 due to the pandemic, the S&P 500 was down by more than 30% year-to-date while gold prices held firm. By March 2020, gold was up by about 1% year-to-date.
Over the past five years, the price of gold has increased faster than the S&P 500. Gold increased approximately 54% between February 2019 and February 2024, while the S&P 500 went up by 50% over the same period of time.
In 2024, gold prices increased by 30%, outperforming the S&P 500’s 20% gain over the year.
What Is The Average Return on Gold Investments?
Between January 1971 and March 2024, gold had an average annual return of 7.98%. In 2023, the average annual return on gold was 13.1%.
- Since 1990: From January 1990 through January 2023, the S&P 500 generated an annual return of 7.1% adjusted for inflation. Gold generated an annual inflation-adjusted return of 2.3%.
- Since 2000: Gold generated an annual return of 7.3% adjusted for inflation between January 2000 and January 2021, while stocks produced a return of 4% after factoring in inflation. This was largely due to the financial, real estate, and credit crisis of 2007.
The Value of Gold vs. The Value of the Dollar
Gold typically has an inverse relationship to the U.S. dollar. As the dollar’s value goes up, the value of gold goes down. The weaker the U.S. dollar, the higher the price of gold. For this reason, gold is viewed as a hedge against inflation.
Gold Price
According to the World Gold Council, the spot price of gold rose 12.7% year-to-date in 2024. The current price of gold is USD $2,753.38 per troy ounce.
The spot gold and current price are determined by the price set by the London Bullion Market Association (LBMA).
Central Bank Gold Investments
Based on the growing inflation rates, central banks worldwide are increasing their gold reserves every year. In 2023, central banks increased gold holdings by 14% in the first nine months.
On the other hand, investments in gold-based exchange-traded funds (ETFs) and similar investment vehicles decreased by 189 tons in the first nine months of 2023, compared to a 20-ton decrease during the same period in 2022.
As of 2023, the U.S. Treasury holds a gold stockpile of around 8,130 metric tons.
Gold's Long-Term Return
Research by the World Gold Council shows that over the past 50 years, gold's average annual return of 8.0% aligned closely with global nominal GDP growth (7.8%) and outperformed the U.S. inflation rate, measured by the CPI, at 3.9%.
Gold can protect wealth in the long run, even when other asset classes, like stocks, may be more volatile.
National Gold Investment Statistics
What Percentage of Your Portfolio Should Be In Gold?
Some experts recommend allocating 5% to 10% of your portfolio to gold to ensure stability during market volatility and hedge against inflation. Ultimately, how much of your portfolio you allocate to gold depends on your short- and long-term financial goals and risk tolerance.
How Much Gold Does the Average Person Hold?
When the United States declared gold illegal in 1932, it was estimated that “gold hoarders” were holding onto at least $1.4 billion of the precious metal—double the stated reserves of the Bank of England. Though there was a concerted effort to confiscate gold, experts estimate that at least 20% of that amount remained hidden by individuals.
Americans have been allowed to legally own gold coins and bullion since 1975, but it's tough to track exactly who owns gold and where they store it. The World Gold Council tries to track the supply and holdings globally, but the organization claims it cannot accurately state the private holdings of gold in the United States or most other countries.
How Many Americans Own Gold?
Only about 10.8% of Americans own gold. Gold is still a niche market, and the majority of Americans do not own any gold or silver.
What Demographic Owns the Most Gold?
Historically, most U.S. gold investors have been professional, college-educated (some with post-graduate degrees as well), upper-income men, and women between 40 and 65 years of age.
However, millennials are becoming increasingly more likely than older generations to own gold and other precious metals like silver and platinum. Men and women between 18 and 34 years old have become the most inclined to invest their money in precious metals, with 7.5% indicating they already own both gold and silver.
Among generations, Gen Z is least skeptical of new traditional investments but is more interested in alternative investments. Millennials, meanwhile, are the most likely to have made alternative investments within the past six months.
Gold Content of Coins and Bars
Gold bars—also known as bullion—are typically sold by gram or ounce with the purity, manufacturer, and weight stamped on the face of the bar. Others might come with an assay certificate. This certificate guarantees their weight and purity and that they meet the Good Delivery Standards.
Investment-grade gold bars must be at least 99.5% pure gold to hold it in an IRA. Bars with 999.9% finesse are considered pure gold. A 24-carat gold bar is considered pure gold.
Gold coins typically have a lower gold content than bars—either 22 carats (916.7) or 24 carats (999.9). The coin’s purity and weight are usually inscribed on the reverse (back).
Most Popular Gold Bullion and Coins
The 1 Troy oz gold bar (31.1 grams) is the most common size traded around the world. It’s about the size of a military dog tag, but thicker.
- American Gold Eagle Coins
- Credit Suisse Gold Bars
- Johnson Matthey Gold Bars
- Valcambi Gold Combibars
- Canadian Gold Maple Leaf Coins
Gold IRAs
To store gold in a gold IRA, a 99.5% purity level is required. The following gold coins and bars are considered IRA-eligible:
- American Gold Eagle Coins
- American Gold Buffalo Coins
- Australian Kangaroo Nugget Coins
- Austrian Gold Philharmonic Coins
- Canadian Gold Maple Leaf Coins
- Credit Suisse Gold Bars
- Johnson Matthey Gold Bars
- Valcambi Gold Combibars
Gold Storage Facilities & Cost
While you are not required to keep physical quantities of precious metal coins and bullion in approved storage facilities, you must store the gold you purchase to fund a gold IRA in an IRS-approved depository; you can’t keep it in a home safe or safety deposit box. Depositories that keep gold, silver, platinum, and palladium insure the precious metals within their facility to cover theft and natural disasters. These depositories also undergo independent audits.
There are six IRS-approved depositories in the U.S.:
- Delaware Depository
- Brinks Security
- HSBC Bank USA
- JPMorgan Chase Bank North America
- A-M Global Logistics
- CNT Depository
Storage fees for gold are typically 0.5 % to 1.0%. Some depositories might change a flat annual rate depending on the amount of gold being stored. These fees range from $50 to $300.
Gold Taxes by State
Gold Mining Statistics
Global gold mining production increased following the 2008 economic crisis. Gold mining has evolved considerably since the manual panning technique, which sorts gold through a shallow pan filled with sand and gravel. Other gold mining processes include placer mining, sluicing, and dredging.
- Global production of gold in 2023 totaled 3,000 metric tons.
- China currently mines the most gold in the world, with an estimated 370 metric tons produced in 2023, while Australia followed closely, producing about 310 metric tons in 2023.
- The United States mines about 170 tons of gold each year and has the largest gold reserve in the world (8,000 metric tons). More than half of the inventory is stored at the United States Bullion Depository at Fort Knox, Kentucky, where it is guarded by an active U.S. Army camp.
- The local gold consumption in the U.S. for 2023 was about 250 metric tons.
- The U.S. gold production was around 170 metric tons, valued at around $10 billion in 2023.
- U.S. gold resources are around 33,000 tons: 15,000 tons in known deposits and 18,000 tons in potential yet undiscovered areas.
- Over 40 lode mines in 11 states contributed to the domestic gold production in 2023.
- The recycling of new and old gold scrap totaled 90 metric tons in 2023, a 3% decrease compared to 2022.
Nevada is the largest gold-producing state in the U.S. (73% of the nation's total in 2023). Carlin Mines Operations in Nevada mined the largest amount of gold in 2022, 895,299 oz.
Other states like Alaska, Colorado, Arizona, and California also contribute to the domestic production of the yellow metal.
Gold Trends and Predictions
Will Gold Go Up in 5 Years?
Many experts believe investments in gold will increase due to concerns of a recession and banking risks following several high-profile bank failures.
According to a poll of analysts and traders conducted by Reuters in January 2023, gold is predicted to average $1,825 an ounce in the first quarter of 2023, $1,840 in the second, $1,852.50 in the full year and $1,890 in 2024.
Because gold is considered a hedge against the dollar, investors will continue to invest in gold as a diversification method for the longer term—especially during times of market volatility and stress.
The price of silver is also expected to rise to $23 an ounce in 2023 and $24 in 2024, which is much higher than the $20 for 2023 predicted in previous polls. Silver averaged $21.77 in 2022. In fact, many believe that silver will begin to outperform gold.
Bottom Line
In 2024, gold solidifies its status as a premier investment, rising 30% this year amid economic uncertainty, with a current price of USD $2,753.38 per troy ounce. Despite only 10.8% of Americans owning gold, interest, particularly among millennials, is increasing. Central banks boosted their gold reserves by 14% in 2023, highlighting its role as a safe-haven asset. With an average annual return of 7.98% from 1971 to March 2024, gold remains a vital component for portfolio diversification and inflation protection.
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Sources
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