What Has Made Gold ETFs a Great Long-Term Investment

Gold and related ETFs have been getting a lot of attention lately as a resurgence of risk-off events help trigger greater safe-haven demand, especially as traders grow wary of a correction in an extended bull market environment.

“I think when the books close on 2017, investors are going to look back and this year will provide yet another definitive proof point of why people should hold gold as a strategic asset class,”  Matt Mark, Head of Distribution Strategy for the World Gold Council, said at the recent Morningstar ETF Conference.

Many investors have noticed the benefits of incorporating gold exposure to a diversified portfolio, especially in periods of heightened volatility. However, gold has also been an attractive long-term asset.

“As we’ve discussed, gold tends to be thought of as a store of value or something I might use tactically, but investors day by day are coming to this realization that all those tactical proof points are leading up to a pretty impressive long-term strategic track record,” Mark said.

Since the 1970s, gold has returned an average 10% per year, comparable to the S&P 500 average price performance. Over the past 10 to 20 years, gold has also held up, supported by important structural changes in the market, like the economic expansion of emerging markets, increased use of gold as part of foreign reserves by central banks and the rising popularity of gold-backed ETFs.

Gold’s performance has been supported by the positive effect that rising incomes have both on the jewellery and technology demand for gold and also in the form of long-term savings.