By Jason Ashley, June 2025

Gold has been a hot topic recently, and for good reason. With stellar recent returns, showing a remarkable 25% increase year-to-date as of April 30, it's certainly captured the attention of many investors. This strong performance has led to increased discussion, particularly around the belief that gold acts as a "safe haven" asset.

But what exactly is a safe haven? It's generally understood as an asset that can help stabilise a portfolio when equity markets are volatile or "choppy". The idea is that during periods of market stress, gold provides a reliable refuge, protecting your investments from significant drawdowns.

While recent gains might seem to support this narrative, it's crucial to look beyond short-term performance and examine gold's historical track record in the larger context of portfolio stability.

Gold's Historical Performance: A Reality Check

When we compare gold's historical performance to a broad market index like the S&P 500, a different picture emerges, one that challenges the "safe haven" perception.

Consider the frequency of positive calendar-year returns since 1970:

• Gold has been positive in just 60% of calendar years. This means that in 4 out of every 10 years, gold delivered negative returns for the year.

• In contrast, the S&P 500 Index has been positive in a significantly higher 80% of calendar years over the same period.

This data shows that gold has been "far from immune to drawdowns". Despite its recent surge, its historical volatility and lower frequency of positive annual returns suggest it may not consistently provide the stability many associate with a true safe haven.

The Verdict: Beyond Recent Gains

While gold's recent performance has been impressive, investors should exercise caution when labelling it a guaranteed safe haven. The historical evidence indicates that "investors hoping for a safe haven may not find it with gold". Its past performance demonstrates that it can indeed experience significant negative returns, which is contrary to the core expectation of a safe haven asset.

Important Disclosures:

• Past performance is not a guarantee of future results.

• Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value.

• There is no guarantee strategies will be successful.

• This material is provided for background information and use only. It does not constitute investment advice, a recommendation, or an offer of any services or products for sale, and is not intended to provide a sufficient basis on which to make an investment decision.

• Before acting on any information, you should consider whether it is appropriate for your particular circumstances and, if appropriate, seek professional advice.