A lot of people, especially among the Asian community, have a long conventional perspective where gold is a stable investment compared to other existing investment vehicles. I, for one, used to think so back when I was a teenager.

For a while, I have been intrigued by the conventional thinking of gold as a stable investment. Hence, I went on researching and managed to do some digging into this topic.

In this short yet important article, let’s explore if our conventional perspective is true, and do some myth-busting wherever necessary:

Gold is, in fact, not as stable as you think

To many, gold is thought to be a stable store of wealth. At the very least, gold should be something that, in our very own slang –

“Will not lose money one right?”

Apparently, that’s not the case.

Take SPDR Gold Shares (GLD), an ETF that tracks gold performance, as a benchmark – which has an mean annual return of 0.39% for the past 10 years (not too bad for a ‘stable’ investment, huh?).

However, just looking at the average annual return DOES NOT give us a clear picture of how stable gold has performed.

Now, instead, let’s look at the standard deviation value of gold – a measure that will give us a better view of how volatile is gold over a 10-year period.

With a standard deviation of 16.59, this provides us with a better picture of gold’s volatility.

Essentially, a standard deviation of 16.59 means that if you have held gold for the past 10 years, there is a probability that your return could go as high as 16.98% a year (0.39% + 16.59%), or as low as -16.2% (0.39% – 16.59%) a year.

In comparison, the S&P 500 index scored an mean annual return of 1.13% per year, with a standard deviation of 12.48 for the last 10 years.

This means that, if you have invested and held the US stock market for the past 10 years, your return could be as high as 13.61% (1.13% + 12.48%), or as low as -11.35% (1.13% – 12.48%) a year.

Simply put, gold’s movement to the upside and downside is huge and is definitely not as ‘stable’ as perceived by many. In fact, gold is a volatile asset – even when compared to the stock market.

Gold vs Stock Market Volatility over the past 10 years. (Source: Yahoo Finance)

Gold is Volatile, But…

It is not something you should overlook. This is because gold, even as a volatile asset, is a great portfolio diversifier with almost 0 correlation with the stock market. Also, gold is a great hedge of wealth against growing consensus towards global interest rate reduction.

Even more so, gold also plays an important part in the portfolio of prominent investors, namely as a hedge against inflation. In the All-Weather Portfolio by Ray Dalio (founder of investment firm Bridgewater Associates, one of the world’s largest hedge funds), gold makes up 7.5% of the total portfolio aggregation.

In other words, it still makes a lot of sense for one to include SOME proportion of gold into his or her portfolio as an effective way of wealth preservation. 


Ray Dalio’s All-Weather Portfolio (Source: IWillTeachYouToBeRich)

No Money Lah’s Verdict

In short, gold is not the ‘stable’ investment as perceived conventionally. As such, gold is NOT SUITABLE to become the MAIN store of wealth and investment vehicle for most people, due to its volatility as mentioned above.

However, gold should not be overlooked, as it still has its advantages in diversifying your risks when it comes to the preservation of your wealth.

To end, here’s an interesting angle to look at gold, as shared by a friend of mine, Jason:

Gold should not be seen through the investment lens, but the preservation lens. And not the preservation of fiat value, but for value where fiat money cannot exist (meaning, the day when our paper money is no longer valuable as a means of exchange)


Real Estate Investment Trusts (REITs) is one of my favorites to invest in, as they provide relatively stable dividends – hence making them a great passive income source.

Disclaimer: This article is written based on my best research as of the time of writing, and should not be considered as a buy/sell recommendation. Please do your own due diligence and/or seek professional advice when making your investment decision.


Last Updated on January 26, 2023 by Chin Yi Xuan

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Chin Yi Xuan

Hi there! I am Yi Xuan. I am a writer, personal finance & REIT enthusiast, and a developing trader with the goal to become a full-time funded trader. Every week, I write about my personal learnings & discovery about life, money, and the market.

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