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Some Help Gold Has Been
Results in 2026 haven’t helped support the common belief that precious metals such as gold hedge adverse conditions in the world. Since the onset of the Iran war on 28 February—a development most of us would consider adverse—the price of gold has fallen by 14.0%, erasing much of its strong gains from earlier in the year. By comparison, the S&P 500 Index is up 10.2% since 28 February. For investors expecting gold to be their ballast when unforeseen risks threaten the world, reality hasn’t panned out that way.
This reinforces the importance of evaluating the role assets play in a portfolio. Most investors wouldn’t expect stocks to serve a risk management role—history shows the US market has been down on average at the start of previous geopolitical events. But stocks offer a positive expected return. In contrast, it’s challenging to support a positive expected return simply for holding gold. And gold has experienced drawdowns at a more frequent rate than the US stock market. That, combined with the decline in value during a concerning geopolitical environment suggests investors should be sceptical that gold can be a cure when times are tough.
Exhibit 1
Cumulative Returns for 2026 as of 29 May
Past performance is not a guarantee of future results. Actual investment returns may be lower.
Glossary
Expected return: An estimate of average anticipated returns informed by historical data.
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