Gold as an investment has a history like no other contemporary asset such as stocks or bonds. Its longevity as a store of value is something other assets cannot claim. But like any investment, gold rises and falls in value, and investors considering it for their portfolios need to understand its risks and how it has performed versus other assets.

Our series "Focus on Gold" can help investors understand its characteristics and answers questions about how it may fit as part of an investment strategy.

Transcript: Focus on Gold

Gold was discovered approximately 5,000 years ago, and was first coined roughly 3,700 years ago in an area of Eastern Europe now known as Turkey.

Gold is impervious to both air and water, which means that essentially all the gold ever mined still sits above ground, even if it's sitting in a sunken pirate ship somewhere in the Caribbean.

Gold is extremely dense and heavy. If you fill a one-gallon milk carton with gold it would weigh 161 pounds.

While gold has been discovered on all seven continents, the earth does not yield it easily. In all of recorded history only 175,000 metric tons of gold have been mined.

By comparison, the world produces nearly 160,000 metric tons of aluminum every day. Compare the value of the metal in a soft drink can. A typical twelve-ounce soft drink can contains about three cents worth of aluminum. That same can made of gold would be worth about $600.

Gold is very malleable, which means it can be easily reshaped and stretched. A little bit goes a long way. For example, an ounce of gold can be pounded into a thin wire form that could stretch half the distance of Long Island, New York. That's over fifty miles.

The demands for gold are quite diverse. Of the 3000 metric tons mined in 2015, the majority of the gold, 57 percent was used for jewelry. The next largest use was investments, usually coins and bars, at twenty-two percent. Central banks purchase 13 percent and industry uses about 8 percent.

Speaking of central banks, here are the top six central banks holdings of gold.

The top three producers of gold by country are China, Australia and Russia. And the top three consumers of gold by country are China, India and the United States.

Is that gold medal really gold? Olympic gold medals only contain 1.34 percent gold. The rest is silver and copper.

Suffer from aurophobia? Then you probably won't be wearing or investing in gold. Aurophobia is the fear of gold.

And finally, the largest gold nugget ever mined named "Welcome Stranger" was discovered in Victoria, Australia in 1869. It weighed a whopping 172 pounds and yielded 156 pounds of pure gold when refined.

And for investors, watching gold prices move up or down can provide a wealth of information about confidence in the markets, uncertainty in the world, and the direction of interest rates.

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The series will cover:

  • What makes gold unique as an investment
  • Global supply and demand for gold
  • How gold has performed as an investment historically
  • A comparison of gold versus other assets
  • Our gold and gold miner expectations in 2017 
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Gold's Uniqueness

Gold's rich history as a store of value and money is something most other major assets cannot claim and may hold a place in most investors' portfolios.

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Who Owns Gold

In the second entry of our series, Head of Real Asset Strategy John LaForge discusses who owns the world's gold and where it comes from.

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How Gold Behaves

Head of Real Asset Strategy John LaForge addresses a series of questions that investors repeatedly ask about gold's performance.

image of gold bars
image of gold bars

Gold and Gold Miners in 2017

In the final entry of our series, Head of Real Asset Strategy John LaForge discusses the outlook for gold, its performance as a commodity, and potential opportunities for investors over the next few years.