Gold outshines the stock market with record-breaking 65% surge in 2025

Gold has become a favoured asset for central banks in emerging markets as an alternative to the US dollar. Its appeal has grown not just as a safe haven during geopolitical turmoil but also as a hedge against inflation. Over the past decades, its performance has often rivalled—and sometimes surpassed—that of stocks, reshaping investment strategies worldwide.

The shift towards gold gained momentum after 2000, driven by a series of economic and political upheavals. The early 2000s saw currency devaluations, with the euro losing 85% of its purchasing power against gold. The 2008 financial crisis further cemented its status as a reliable store of value, with gold prices climbing while stock markets tumbled. More recently, conflicts in Ukraine and the Middle East, coupled with rising Chinese demand and central bank purchases—particularly from China since 2022—have pushed prices to new heights.

From around $250 per ounce in 2000, gold surged to record levels, reaching nearly $3,000 by March 2025. This year alone, it has risen by 65%, outperforming many traditional assets. While individual stocks like Monster Beverage, Nvidia, and Apple have seen dramatic gains since 2001, gold's long-term growth has been remarkably steady. Between 2001 and today, it delivered an average annual return of 12%, compared to 7% for stocks. Even during the 1970s, gold's annual return hit over 30%, far outpacing the stock market's 3%.

Yet gold's performance hasn't always been consistent. Between 1981 and 2000, its value declined by over 3% annually, while stocks soared by more than 12% per year. Short-term corrections remain common, and while the S&P 500 has averaged 8% annual growth since 1971, gold's resilience in crises has kept it competitive. Over the 21st century, it has even outperformed global stocks, including dividends, during periods of high volatility.

Central banks now view gold as a strategic reserve, reducing reliance on the dollar. Its dual role—as both a crisis shield and an inflation guard—has reinforced its position in diversified portfolios. With expectations of US Federal Reserve rate cuts and ongoing geopolitical tensions, demand is likely to stay strong.

For investors who held gold since 1971, the average annual return has reached around nine percent. Its performance in recent decades, particularly during downturns, has solidified its reputation as a stable asset. While stocks continue to offer higher long-term growth in some cases, gold's ability to weather uncertainty keeps it firmly in the spotlight for both institutions and individual investors.