Among the various asset classes in which it is possible to invest, gold shines this year. Since January 1st, the performance of the yellow metal in euros is 21%, better than the American stock market and with much lower volatility as measured by us at Banca Patrimoni Sella & C.
A sporadic phenomenon? Not really: in three years gold gains 48%, in ten years 135%. Not bad for an asset that does not provide income, but has always played its role as a reserve of value.
Today, however, we do not want to bore you with the reasons that help the yellow metal to rise and that have occurred over time:
- the birth of gold ETCs (2003 by the Australian Graham Tuckwell, a real magician) which made purchasing much easier and channeled tons and tons of investments over time.
- the era of very low and negative rates (2008-2016 and then 2020-2021) which eliminated the classic disadvantage of gold of not offering a carry, coupons, dividends.
- the growing geopolitical uncertainties (from 2020 onwards based on the Geopolitical Risk Index) linked to the return of wars, the United States – China dualism and the growing importance of the “global south” which is reclaiming its place.
- the huge purchases by the central banks of emerging countries that on average own much less than developed countries (Italy in third place in this ranking after the USA and Germany) and that would like to fill the gap. From 2023 onwards.
Let’s talk instead about other characteristics of gold that have undoubtedly contributed to increasing its charm and importance over the millennia.
Gold (Au, atomic number 79) is a metal that does not oxidize, is unalterable and resistant to acids. It melts at 1063 degrees and has a very high malleability, think that with just 1 gram of gold it is possible to produce a very thin sheet with a surface area of one square meter or create a wire almost 1 kilometer long!
With a specific weight of 19.3 it is among the heaviest metals (only Platinum exceeds it with 21.4); lead and silver have a specific weight equal to about half of gold. This characteristic means that the dimensions of a gold ingot are extremely small: a 1 kg ingot (which today is worth about 72,000 Euro) is 12 centimetres long, 5 wide and 1 thick.
Or that all the gold mined so far (about 200,000 tons) could fit into a cube 21 meters on each side.
Gold production has always grown throughout history, stabilizing at around 3200 tons in the last 10 years, and the producing countries have changed a lot: from the period 1850-1900 in which the United States and Australia dominated world production, to the last century in which South Africa had become the main player with 75% of the total in the 70s, to finally arrive today where China, Russia and Australia hold the first three places. With the beautiful graph of VisualCapitalist we will see you in the next episode.
