Gold is widely perceived to be a safe haven investment but recent swings in the precious metal in early 2026 have seen its price trade in a range between $5,600 and $4,350 in just a matter of days. Potentially catching out investors who thought it would protect against market volatility.
Across a longer time period there have also been considerable ups and downs in gold’s performance. Since the year 2000, gold has delivered an average annual return of 11.9% according to data from Sharescope. While this is a level many investors would be happy with, the average does not tell the whole story by any means.
How much has gold moved in individual years?
In its best year – 2025 – gold saw a 65% advance while its worst in 2013 saw a decline of 28%. A difference of 93 percentage points.
While stocks are often seen as the opposite of a safe haven this is a significantly bigger variation than seen in the FTSE 100 over the same time period, for example. The worst year for the index came during the financial crisis when it fell 31% and the best was a 22% increase the following year as equities recovered (a 53-percentage point difference).
That is not to make any judgement about the merits of investing in gold but it’s important investors understand how the price of the precious metal has historically behaved when making decisions about their portfolio.
Why AJ Bell funds don’t hold gold
AJ Bell funds avoid direct exposure to gold with head of investment partnerships Ian Aylward explaining some of the reasons why this is the case:
“Firstly, gold and other precious metals are fundamentally difficult to value because they produce no income in the form of dividends or other cash flows.
“With no yield or traditional valuation tools, models used to build longrun expected returns can quickly become unusable. There are few ways to ascertain whether it is cheap or expensive. This makes gold hard to incorporate into strategic asset allocation frameworks such as ours.”
Aylward adds: “Gold is also inherently volatile, as we have seen, with risk characteristics closer to equities than to defensive assets.
Its annualised volatility (around 17%) is significantly higher than US treasuries (around 8%) and broadly comparable to equity indices. This doesn’t tick the boxes of a typical ‘safe haven’ asset from our perspective and limits its reliability for drawdown protection in diversified portfolios.”
How gold has performed at times of market stress
During the 2008 Global Financial Crisis, gold did not diverge from falling equities until 150 days after the initial drop, with its price fluctuating frequently. Although gold eventually recovered faster than equities, its negative correlation with stocks is inconsistent – Morningstar data shows that in half of the 10 worst quarterly global equity declines over the past 25 years, gold also dropped before later rebounding.
What other examples of defensive investments are there?
Examples of other defensive assets include government bonds – treasuries in the US and T-bills and gilts in the UK – cash and even some shares in specific sectors. Typically, defensive stocks are those which aren’t tied to the economic cycle or an obvious business cycle.
Pharmaceutical firms or tobacco makers are examples with both tied to steady, long-term drivers of demand.
While these may not have offered the same return as gold they have generally seen much lower levels of volatility.
Tom Sieber: Content Editor
Tom Sieber is AJ Bell's Content Editor. He was previously the Editor of Shares Magazine. He has been with the business since 2012.
Tom is a regular contributor to the AJ Bell Money & Markets...
