GLTER Gold’s long-term expected return
Gold’s primary function is as a store of value: Report While gold’s contribution to managing portfolio risk is well established, supported by a large body of work devoted to its hedging characteristics, its contribution to portfolio return is not. Frameworks for estimating gold’s long-term return exist but fall short of a robust approach that aligns with the capital market assumptions for other asset classes. This report, GLTER Gold’s long-term expected return, published by World Gold Council (WGC), sets out such a framework, accounting for gold’s unique dual nature as a real good and a financial asset. Publications tackling gold’s expected return have generally concluded that gold’s primary function is as a store of value, implying a long-run co-movement of gold with the general price level (CPI). Alternative approaches using risk premia estimations or bond-like structures with embedded options produce similar results. And while existing research is rich in insight, two fe