Why does gold remain the favorite safe haven? An analysis of two decades of evolution and profitability

As we write this in October 2025, gold is trading around $4,270 per ounce. If you went back twenty years, this figure would seem like science fiction. In 2005, it barely exceeded $430. Today, that tenfold increase amounts to an accumulated gain close to 900%. But this is not a story of reckless speculation, but of something much deeper: the constant search for security in uncertain times.

Gold in 2025: all-time highs in the context of global tensions

Data from the last five years tell a fascinating story. Between 2020 and 2025, the precious metal has advanced more than 124%, rising from $1,900 to surpassing $4,200 per ounce. This is not an isolated movement, but the culmination of a cycle started during the pandemic, when investors desperately sought assets that maintained their real value.

The annualized return over the past decade hovers around 7% and 8%, truly remarkable considering we are talking about an asset that does not generate dividends or interest. That figure makes sense when compared to U.S. bonds or European fixed income during the same period.

Four acts of a monetary drama: the evolution of gold prices

2005-2010: When the global crisis sheltered its demand

The first half of the 2000s was chaotic for traditional markets. The dollar was weakening, oil was soaring, and financial assets were demoralized after the subprime mortgage collapse. Gold went from $430 to surpass $1,200 in just five years, driven by massive distrust in the banking system. Lehman Brothers’ bankruptcy in 2008 confirmed what many feared: the yellow metal became the last refuge for frightened investors.

2010-2015: The technical pause

With the crisis under control and economies recovering, equity markets regained prominence. Gold lost relative shine, moving sideways between $1,000 and $1,200. It was a necessary correction phase, although the metal kept its defensive role intact within balanced portfolios.

2015-2020: The return of uncertainty

Trade wars between Washington and Beijing, fiscal deficits reaching historic highs, and interest rates falling to unprecedented lows revitalized demand. COVID-19 accelerated everything: in 2020, gold surpassed $2,000 for the first time in history. Institutional investors and central banks increased their purchases.

2020-2025: The unstoppable climb

This last period has been the most spectacular in nominal terms. From $1,900 to over $4,200 represents a move that even the most optimistic projections from five years ago would struggle to match.

Brutal comparison: how did gold perform against stock indices?

This is where the narrative gets interesting. Over the last five years, gold outperformed both the S&P 500 and the Nasdaq-100 in accumulated returns. A rare feat over extended periods.

Looking back two decades, the Nasdaq-100 remains the undisputed winner with over 5,000% accumulated. The S&P 500 advances close to 800%. But gold hovers around +850% in nominal terms since 2005, making it a serious contender in the long-term race.

What is truly revealing is not just the final return, but the journey to get there. In 2008, while stocks plunged more than 30%, gold barely retreated 2%. In 2020, when uncertainty paralyzed markets, it again acted as a safety cushion. That defensive feature comes at a price: it is not the asset to get rich quickly, but to preserve wealth when everything trembles.

What explains this surprising trajectory?

Negative real interest rates:

Gold appreciates when real yields (nominal minus inflation) fall into negative territory. The massive quantitative easing by the Federal Reserve and the European Central Bank turned bonds into assets with negative inflation-adjusted returns. Investors, instead of earning money by lending, opted for metal that does not erode.

A weak dollar acted as a catalyst:

Since gold is priced in dollars, a depreciated US currency boosts its price. The dollar’s weakening after 2020 coincided precisely with the largest bullish jumps in the metal.

Revived inflation and public spending programs:

The pandemic generated inflation fears confirmed years later. Investors sought to protect their purchasing power, and gold responded to that demand.

Permanent geopolitical tensions:

Regional conflicts, trade sanctions, and restructuring of the global energy order led emerging market central banks to accumulate gold reserves as a diversification away from the dollar.

From theory to practice: how to use gold in your portfolio?

The most common mistake is treating gold as speculation. Serious advisors recommend it as a tool for structural stability. Most suggest an exposure of between 5% and 10% of total assets, through physical gold, metal-backed ETFs, or funds that replicate its behavior.

In portfolios heavily concentrated in equities, that percentage acts as a volatility hedge. If a market correction hits your stock portfolio, that small gold cushion tends to stabilize or even appreciate.

There is another often overlooked advantage: universal liquidity. Anywhere in the world, gold can be converted into cash without capital restrictions or the complexities of sovereign debt.

Final reflection: permanence or trend?

Gold does not thrive because it generates dividends or corporate profits. It thrives because it represents trust. When that trust disappears —due to uncontrolled inflation, unsustainable debt, geopolitical conflicts, or monetary crises— the metal returns.

In the last decade, it has successfully competed against stock indices. In the last five years, it has outperformed them. That is no coincidence: it reflects a world where investors are increasingly desperate to find stability anchors.

You will not build a fortune solely with gold, but you will protect what you have when everything else falters. For those thinking about balanced portfolios for the next twenty years, the evolution of gold suggests it will continue to be, exactly as two decades ago, an essential piece of the global financial puzzle.