Gold VS. FTSE – Which is the better investment?

Stock market indices measure financial performance in different regions based on company stock purchases. Although many factors influence market performance, a high index score indicates a better investment opportunity. However, stock market indices famously change like the wind

Bearing this in mind, how do some of the biggest global stock markets compare to the value of gold?

The experts at The Gold Bullion Company have compared gold prices against the most popular cryptocurrencies and stock exchanges to determine which is the better investment option.

Gold VS. Financial Times Stock Exchange 100:

FTSE average year-on-year value since 2019: 2.4%

FTSE 2024 vs. 2019 value change: 7.5%

Gold average year-on-year value since 2019: 14.7%

Gold 2024 vs. 2019 value change: 92.1%

The FTSE comprises 100 of the most valuable companies on the London Stock Exchange by market capitalisation, one of the best-known measures of the UK economy’s performance. Since taking a hit in 2020, the FTSE has been steadily growing, and with an average index change of 2.4% in the last five years, this stock market is the most stable on our list.

The FTSE may be a stable investment, but gold is more worthwhile in terms of its change in value. While the FTSE stock market performance has increased by 7.5% since 2019, the value of gold is 93.3% more than it was five years prior.

Cameron Parry, CEO of gold currency provider and bank challenger at TallyMoney provides advice on investing and whether consumers should choose bitcoin, stock markets or gold:

“The stability of gold priced in GBP relative to changes in GBP inflation is insightful. A direct comparison of gold priced in GBP versus GBP priced in gold is particularly enlightening. Since the start of this century, gold has increased on average at a rate of 10.56%p.a. against GBP. In absolute terms, gold has increased from £176.20 per ounce, circa 1,000% uplift in GBP.

“The investment performance of gold, cryptos and stocks needs to be balanced with understanding their other differences. Firstly, if you don’t understand what you’re getting, then probably don’t invest in it – which, for most people, should rule out cryptos. Gold is a different class of asset to the others. Most people understand that gold is a safe, stable store of value. And whilst the price fluctuates in the short term, the value never falls off a cliff. Whereas a crypto can go to zero, and indeed so can stocks if a listed company goes under.

“Even amongst cryptos, there’s a very wide range. Whilst Bitcoin has matured into an established speculative asset class and is deflationary by design, and Ether has novel functionality value, Dogecoin’s value seems to stem from celebrity rather than innovation, and it is inflationary by design. The performance of stocks also shows a wide range of performance depending on the market, and even more so if investing in specific companies within those markets.

“So recognising that you’re not comparing apples with apples with these investment options is crucial to consider, along with returns. The right balance can be struck with the right mix – with Bitcoin’s potential for ultra-high returns, you don’t need to hold a lot of it to generate as much as you would from the rest of your portfolio if it was in gold for example. Which is handy as Bitcoin comes with big risks, and gold comes with low risk. As for GBP, painfully, almost insultingly, GBP is designed to lose value over time in real terms – the Bank of England’s target is to devalue the pound by 2% a year, although the real loss of value is reflected in rising prices over time, which happens at a considerably faster pace.”

Further findings:

• Gold is a more stable investment than Ether, a new cryptocurrency, evidenced by its 14.7% average year-on-year change over the last five years compared to Ether’s 263.3%. Most notably, Ether’s worth dropped by more than 43% from £2,554 in 2022 to less than £1,450 in 2023.
• Bitcoin’s value has fluctuated over the years, with the worst dip in 2023, when it dropped by 34.6% compared to the previous year (from £33,482 to £21,887). On the other hand, aside from a 5.5% drop in 2021, gold’s value has increased steadily, making it a more stable investment, according to data from the last five years.
• Gold is a much better option than Dogecoin if you want a stable investment. Regarding value, Dogecoin has seen many ups and downs over the last five years, including a 3,070% spike in 2021 and a 43.6% dip in 2023.

You can view the full findings again by clicking here.