#MARKETS & INVESTING
Gold barely protects against inflation. Since 1900 it has returned 1.3% a year after inflation — five times less than stocks.
Published on August 12, 2026
Elroy Dimson of Cambridge University, along with Paul Marsh and Mike Staunton of London Business School, have maintained the DMS database for decades, reconstructing annual returns for stocks, bonds, treasury bills, currencies and now gold across 35 markets since 1900. In the 2026 edition of the Global Investment Returns Yearbook, published by UBS, U.S. stocks return 6.6% a year in real terms over 1900-2025, government bonds 1.6%, treasury bills 0.5%, and gold 1.3%.
Does gold at least protect against inflation?
Over a very long period, yes, barely: 1.3% above prices. But that result comes at the cost of entire decades of real decline, with no interim income to wait it out.
In other words: gold preserves value, it doesn't grow it. It's a safe, not an investment.
Three caveats, because they matter
- A 125-year average masks sharply contrasting periods. Gold clearly outperformed in the 1970s and 2000s, and lost a large share of its real value in the 1980s and 1990s.
- Gold pays neither coupon nor dividend. All its return comes from price, which makes it entirely dependent on when you sell.
- The figures are calculated in dollars. For a euro-based saver, currency movements add a source of variation that has nothing to do with the metal itself.
Why it still matters: holding gold to protect against a shock is a defensible decision. Expecting a return comparable to stocks isn't: over 125 years, the gap exceeds five points a year.
For you
- Do you expect your gold to protect you, or to earn you money?
- How long are you prepared to hold it without cashing in anything?
Source: Elroy Dimson, Paul Marsh & Mike Staunton, UBS Global Investment Returns Yearbook 2026, DMS database, 1900-2025.
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