Precious Metals

Gold and Silver in The Pantheon of Investments

This report is about the relative performance of gold and silver as investment assets. It keys off an investment quilt chart comparing annual returns across asset classes. Many investment firms publish such quilt charts, but CPM has never found one that included gold and silver. We built one using the nine asset classes commonly used in such tables but adding gold and silver. The results are stunningly in favor of precious metals as an asset class.

Numerous sell-side financial firms ignore gold and silver as key parts of diversified portfolios for several reasons. However, numerous quantitative studies regularly show that having gold and silver improves the performance of a diversified portfolio. Investing in gold and silver is in investors’ best interests. The CPM quilt chart including gold and silver is seen to the right here in miniature. The expanded, readable version is on page three.

Asset Or Asset ClassWeighted Performance
Gold138
Silver129
Precious Metals (Gold and Silver)267
Small Cap Equity (Russell 2000)149
Real Estate (REIT)144
Large Cap Equity (SP500)140
Emerging Market Equity (MSCI)135
High Yield Bonds132
Developed ex-US Equity (MSCI)126
U.S. Fixed Income113
Global ex-US Fixed Income94
Cash (90-day T-Bill)86
Source: CPM Group, 19 January 2022

The CPM Quilt Chart Of Investment Returns Including Gold and Silver

Annual Returns for Key Indices Ranked in Order of Performance (2001–2021), Percent Change Year‐End to Year‐End

It turns out that the two precious metals combined have been the top performing asset measured as the percentage change at the end of each year from the end of the previous year 30% of the time in the twenty-one years from 2001 through 2021. They were in the number two position 20% of the time and number three another 20% of the time.

In 2020, Silver was the top performing asset, returning 47.4% and gold had the second-best return at 24.4%. They were numbers eight and eleven in 2021, but that is because they were holding onto the gains that they had registered the previous year and in 2019, when gold had gained 18.9% and silver 15.3%.

CPM calculated the relative performance throughout the entire twenty-one-year period as well looking at the individual years. Here, as well, gold and silver shone brightly.

In this exercise, gold and silver were examined separately. Measuring single assets such as gold and silver against indices of hundreds or thousands of individual assets is not fair to the single assets. Even so, as individual assets gold and silver each have shown themselves to be highly competitive against the other nine asset classes included in the study. Gold was only outperformed by U.S. large and small cap equity indices over the entire period. Silver was outperformed by five of the other asset classes, including gold. It outperformed five of the other asset classes in the study.

Efficient Frontier of Portfolio with Gold -1968-2020

To make a fairer comparison CPM combined gold and silver into one sum, Precious Metals. Doing that, precious metals blew away the other assets in terms of their weighted ranking over the past twenty-one years, as the table shows.

Merely summing gold and silver together is not necessarily the most mathematically correct way to compare a precious metals index to indices of other asset classes. Averaging the two would mask the relative strengths of each. Creating a formal precious metals index requires subjective decisions to be made on the construction of such an index, including the weightings assigned gold and silver. CPM constructed two indices. The two indices confirmed that gold and silver combined as an asset class would have been highly competitive, in the top half of several types of investments considered in the quilt chart.

One further interesting point to note is the fact that in many years the ranking was not so much in terms of relative returns but the relative size of losses of value over the course of the year. The top two ranking performing asset classes registered positive returns in all twenty-one years. However, by the time you get to the third- tier ranking, you have the third top performer showing a loss in value in one year: 2018. At the fifth ‘best performing’ return ranking there are three years. Obviously, overall returns deteriorate from there.

The conclusion is that gold and silver stack up very favorably to all other investment assets and deserve to have a significant position in diversified portfolios. CPM’s updates of Ibbotson and Associates’ work from the early 1980s on the optimal portion of a diversified portfolio that should be in gold show that the best risk/reward ratio of an overall portfolio has been 25% – 30% in gold from 1968 through 2020. The efficient frontier, as it is known, depicts the optimal asset allocation for gold coupled with a portfolio of the S&P index with T-bills.

Annual Returns for Key Indices Ranked in Order of Performance (2001–2021), Percent Change Year‐End to Year‐End

Sources: Bloomberg, CPM Group.
Large Cap Equity – S&P 500
Small Cap Equity – Russell 2000
Developed ex-U.S. Equity – MSCI World ex USA,
Emerging Market Equity – MSCI Emerging Markets
U.S. Fixed Income – Bloomberg Barclays US Aggregate Bond Index,
High Yield – Bloomberg Barclays High Yield Bond Index
Global ex-U.S. Fixed Income – Bloomberg Barclays Global Aggregate ex US Bond Index,
Real Estate – FTSE EPRA Nareit Developed REIT Weighted Net Total Return Index
T-bill – 90 Day.
Gold and Silver, Comex Nearby Active Contracts
Annual Returns are percent changes year-end to year-end. T-Bills are year-end.


Disclosures: This information discusses general market activity or other broad-based economic, market and/or political conditions. It also refers to specific prices which pertain to past performance and should not be construed as research of investment advice. Past performance is not indicative of future results, and it should not be assumed that future performance will be as profitable or will equal the performance of the prices described herein. Investing in precious metals involves risk, including the risk of the loss of all or a portion of your investment. Precious metals prices can be volatile and influenced by a variety of different factors, including economic, political, social and market-related events. Precious metals are not suitable for all investors, and for investors for whom investment in precious metals is appropriate, are only suitable for a limited portion of the risk segment of such investor’s portfolio. GBI makes no recommendation whatsoever as to whether any client should invest in precious metals. Although the information contained in this document has been obtained from sources believed to be reliable, GBI does not guarantee its accuracy or completeness, nor does GBI have any obligation to or intend to update any of the information contained herein. This document does not constitute an offer to sell or a solicitation of an offer to buy any precious metals, nor does it address any specific investment objectives, financial situation, tax consequences or particular needs of any potential investor, and does not constitute investment or any other advice.

This report was produced for GBI by CPM Group LLC. CPM Group LLC is responsible for the contents. NOT FOR CLIENT REDISTRIBUTION.

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