Gold a Core Holding Underpinned by Strong Performance and Defensive Characteristics: A Third Major Bull Market

Gold has delivered strong, consistent returns over the past two decades and now appears firmly in its third major bull market. With prices rising from around $1,200/oz in 2018 to $4,500/oz today (as of May'26, a [20]% pa CAGR), this insights piece examines gold’s long-term performance, the strong historic performance, the major structural forces behind this cycle, and our disciplined investment philosophy built around a margin of safety.

Gold as a Core Focus Area

Gold as a Compelling Case Study: Historic Performance and Structural Tailwinds

Gold’s long-term track record, recent price drivers, and unique characteristics make it a foundational holding within the Precious Metals sleeve and a prime illustration of GERAF’s overall philosophy.

Strong Long-Term Price Appreciation and Defensive Nature

Over the last 60 years, gold has delivered average annual price appreciation of approximately 8%, while consistently outperforming during periods of broader equity market weakness. This defensive growth profile is particularly attractive in the current environment.

Three major gold bull markets over the past half-century demonstrate the asset’s powerful cyclical upside:

• 1970–1980: Gold rose from an average monthly price of US$35/oz to US$670/oz — a 19x increase, or 39% per annum over a decade.

• 2001–2011: Gold rose from US$260/oz to US$1,750/oz — a 7x increase, or 18% per annum over 11 years.

• 2018–present: Gold has risen from approximately US$1,200/oz to US$4,500/oz (as of May 2026) — a 4x increase, or 24% per annum over seven years.

The Current Cycle

As of today, it appears we are again in one of these extended bull cycles. Gold has risen from approximately $1,200/oz in 2018 to $4,500/oz (as of May 2026) — a near 4x increase over seven years, representing a 24% per annum CAGR to date.

Predicting exactly how long this cycle could last is difficult. However, as investors it is more productive to understand these long-term mechanics and maintain discipline by anchoring investment decisions to a reasonable long-term gold price assumption.

Furthermore, understanding the structural drivers behind this shift help guide confidence levels around this shift.

Major Structural Drivers Behind This Cycle

These cycles typically last 10+ years and deliver exceptionally strong compounded returns. The current bull market has been primarily driven by two structural forces:

1. Global sovereign indebtedness — US Federal debt recently exceeded US$37 trillion with debt-to-GDP at approximately 120%. As the issuer of the world’s reserve currency, the US trajectory raises legitimate long-term questions for global investors. But the broader concerns relate to global indebtedness, which continues to grow strongly.

   
   

2. Rising geopolitical risk — The 2022 Russian invasion of Ukraine and subsequent Western sanctions (including the freezing of ~US$300 billion in Russian reserves) served as a wake-up call for central banks worldwide. Prior to that, Central Banks owned US Treasuries, however from 2022 onwards Central Banks have purchased gold at more than double historic averages — exceeding 900 tonnes per annum for four consecutive years. This shift away from US treasuries has directly supporting demand and prices.

Our Investment Philosophy

The approach we take at GERAF: every gold-related investment must screen at a meaningful discount to our estimate of fair value based on a conservative long-term gold price, thereby building in a margin of safety.

This methodology has been an important contributor to the outperformance we seek to deliver for investors.