Gold in two decades: from $430 to $4,270 per ounce

An Unparalleled Appreciation in Modern Markets

When we think about the evolution of gold over the past 20 years, the numbers speak for themselves. Two decades ago, it was barely reaching $430 per ounce. Today, October 2025, it trades around $4,270, after breaking historical highs during the year. This is not an ordinary revaluation: it amounts to a tenfold increase, with an accumulated gain close to 900%. To put it into perspective, in 2015, the precious metal hovered around $1,100, meaning it has advanced approximately +295% in nominal terms over the last decade.

Compound Returns: Between 7% and 8% Annually

Here is what is truly remarkable. Translated into a compounded annual rate, this two-decade appreciation represents between 7% and 8% per year. This is extraordinary for an asset that does not generate dividends, does not produce interest, and depends solely on market confidence. Over the past decade, gold has maintained this level of profitability even through periods of severe volatility, technical consolidations, and significant corrections.

In 2018 and 2021, for example, the metal experienced stagnation phases while equity markets reached new highs. However, each time inflation resurged or interest rates fell, gold demonstrated its strength once again. This recurring pattern has positioned it as the most resilient asset during periods of economic uncertainty.

Comparison with Major Stock Indices

Source: Google Finance, 10/21/2025

What is most surprising is that over the last five years, gold has outperformed both the S&P 500 and the Nasdaq-100 in cumulative returns. This is unusual. It indicates that in environments of persistent inflation and reduced interest rates, precious metals become more competitive compared to higher-risk assets.

But there is a crucial detail: the risk factor. In 2008, when stock markets plummeted over 30%, gold only retreated about 2%. In 2020, when the pandemic froze markets, it again acted as a true safe haven. This is gold’s real advantage: it does not always win, but when other assets lose significantly, it loses much less.

Four Cycles Explaining the History

First cycle (2005-2010): the rise of distrust

The years before and after the financial crisis were fundamental. Driven by dollar weakness, rising oil prices, and widespread distrust in financial assets after the mortgage collapse, gold went from $430 to surpass $1,200 in just five years. Lehman Brothers’ bankruptcy in 2008 confirmed its role as a refuge, attracting massive purchases by central banks and institutional funds seeking to safeguard value.

Second cycle (2010-2015): correction and waiting

Once initial panic subsided, developed economies began to normalize. The Federal Reserve started its monetary normalization path, reducing gold’s relative attractiveness. The metal moved sideways between $1,000 and $1,200, representing a phase of technical adjustment rather than structural change. Although it maintained its defensive function, returns were modest.

Third cycle (2015-2020): rebirth

Trade tensions between the United States and China, combined with massive public debt expansions and interest rate reductions to historic lows, reactivated demand for gold. The COVID-19 outbreak in 2020 accelerated this movement decisively: the metal surpassed $2,000 for the first time in its modern history, confirming its status as a trusted asset during existential crises.

Fourth cycle (2020-2025): unprecedented rally

Between 2020 and 2025, gold experienced the largest nominal revaluation in all its recent history. It went from $1,900 to over $4,200, a rise of +124% in just five years. This trajectory is the result of accumulated factors such as negative real interest rates, inflation concerns, ongoing quantitative expansion, and increasing geopolitical tensions.

The True Drivers of Gold’s Price

Why does gold appreciate when other assets falter? The answer lies in specific factors that continue to dominate its behavior:

Negative real interest rates
Gold appreciates when real rates (nominal minus inflation) fall below zero. The monetary expansion policies of the Federal Reserve and the European Central Bank over the last decade consistently reduced real bond yields, making gold more attractive for preserving value.

Dollar strength or weakness
Since gold is priced in dollars, a weak dollar makes it cheaper internationally and stimulates demand. Dollar depreciations recorded at various points over these 20 years, especially after 2020, coincided with the main upward phases of the metal.

Inflation and expansive fiscal policies
The pandemic spurred increased public spending. Central banks injected liquidity massively. Inflation surged strongly. In these contexts, investors seek to protect their purchasing power, and gold is the traditional vehicle for doing so.

Persistent geopolitical uncertainty
Regional conflicts, trade wars, and changes in the global energy architecture have intensified institutional demand for gold. Many emerging economy central banks increased their reserves as a mechanism to reduce dependence on the dollar.

How to Position Gold in a Modern Portfolio

Gold should not be viewed as a speculative asset but as a stability hedge. Its main function is not to generate extraordinary gains but to protect the portfolio’s purchasing power against unpredictable events.

Financial experts suggest maintaining an exposure of between 5% and 10% of total assets in physical gold, gold-backed ETFs, or funds that replicate its behavior. In portfolios with high equity exposure, this percentage acts as a buffer against volatility.

Another decisive advantage: the universal liquidity of gold. In any market, at any time, it can be converted into cash without facing sovereign debt fluctuations or capital restrictions. During times of financial tension, as we have recently experienced, this feature becomes invaluable.

Final Reflection

Two decades later, gold remains an unavoidable benchmark in global portfolios. Its profitability does not come from corporate dividends or balance sheets but from something deeper: trust. When trust erodes due to inflation, excessive debt, political upheaval, or armed conflict, gold returns to the center stage.

In the last ten years, it has demonstrated competitiveness even against the largest stock indices. In the last five years, it has outperformed them. This is no coincidence: investors seek stability in a world that provides it less and less. Gold does not promise quick wealth nor substitute growth. It is silent protection that revalues precisely when other assets falter. For any balanced portfolio, it remains, as twenty years ago, an irreplaceable piece of the financial puzzle.