The Role of Gold in Long-Term Wealth Accumulation

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A financial analysis by the University of Zurich

Several studies have highlighted the importance of gold in wealth building, but all such research varies in its approach. For example, the University of Zurich gold study conducted in January 2025 takes various geopolitical events into account and focuses on the USD and CHF as reference currencies. In addition, Swiss taxes, transaction costs, and counterparty risks are also taken into account. This analysis draws on various portfolio theories and examines the sustainability of gold.

Disclaimer

We have reviewed the comprehensive gold study conducted by the University of Zurich (15 January, 2025) and summarised its key findings and insights on your behalf. Nevertheless, this article does not constitute investment advice. Based on the study, it seeks to offer general information regarding the role of gold as an investment. Please consult your financial advisor as regards any personal capital planning.

Overview of the University of Zurich Gold Study

A 2025 study by the University of Zurich examines the suitability of physical gold for long-term wealth accumulation.
The authors looked back to the past to demonstrate the historical significance of gold throughout human history.
Gold is widely known as a "crisis metal," while other assets often lose value during difficult economic times. Gold can also be used during any emergency or natural disaster.
The optimal proportion of gold in a portfolio can vary according to the investment strategy deployed. Subject to the specific tax regime, a gold allocation of up to 26% is considered realistic.
Investors who opt for gold contracts rather than physical gold must factor in the associated counterparty risk.
In Switzerland, dividends and bond interest are subject to taxation, whereas capital gains remain tax-free.
Digital currencies are often touted as the "new gold." However, assets such as Bitcoin or tokenised gold fall short when directly compared to physical gold.
The sustainability of gold remains the subject of debate. It often depends on the extraction method – recycled precious metals and Fairtrade gold offer certain advantages.

Background to this Swiss gold study

The financial analysis entitled “Gold for Long-Term Wealth Accumulation” was prepared in January 2025 and authored by Prof. Thorsten Hens and Alvin Amstein (MA)—the latter serving as a research associate—for the Department of Finance at the University of Zurich and commissioned by Bank von Roll. Among other academic appointments, Prof. Hens, a German-Swiss economist, holds a professorship in economics at the Swiss Finance Institute and the University of Zurich.

This study aimed to examine the precious metal gold and its role in long-term wealth accumulation, considering both modern perspectives and factors specific to a Swiss context. The authors drew upon internationally recognised publications and academic papers from recent decades. To achieve their aims, the experts analysed gold’s historical significance over millennia and also considered contemporary digital alternatives, such as cryptocurrencies and gold tokens.

Finally, Hens and Amstein addressed the key question of how much gold a modern portfolio should actually contain. To do this, they determined the likely level of gold holdings in Swiss households based on their financial assets, and indicated what a realistic allocation would look like from a financial-economic perspective. A crucial factor in their calculations was whether the investors were private individuals or institutions. Thus, they also produced allocation models both with and without tax obligations.

The history of gold

To meaningfully assess the status of gold in today’s modern world, the authors of this study first looked to the past. The value of this precious metal has built up over time and is thus rooted in its very origins. In many cultures, gold was revered as a divine symbol and served as an expression of power—factors clearly seen in Greek mythology, for example. In early times, gold played a central role in art and religion and has been regarded as a reliable store of value for millennia.

Moreover, gold signifies security. People view gold as a reliable asset, a quality that becomes particularly apparent during economically difficult times. It represents both prosperity and unparalleled wealth protection. Gold is also highly prized for its lustre and obvious aesthetic appeal. According to the study, the reason for gold’s status as a safe haven asset lies in its limited availability: approximately 80% of all gold has already been mined. So, in just over 20 years, there may be no newly mined gold left—or at least none that can be extracted without incurring significantly higher costs than today. Furthermore, gold’s prime position is due to its unique properties as the world’s most valuable precious metal. As the authors explain: “The scarcity and stability of gold clearly distinguish it from paper money.”

Over the centuries, gold evolved into a highly sought-after means of payment. In early antiquity, gold coins facilitated trade; and later, gold was then used to back currencies. When paper money emerged, it was initially fully supported by gold. However, from the 20th century onwards, the role of gold shifted from this direct backing to serving as a currency reserve.

Following World War II, the Bretton Woods system established the dollar as the global reserve currency, while the US currency itself still remained pegged to gold. So it was not until 1971 that the gold standard was finally abandoned, giving way to the current fiat currency system. From then on, the value of gold could evolve independently, entirely detached from the fortunes of any specific currency.

Between 1970 and the 2000s, gold’s significance steadily declined. However, the dot-com crash (2000–2003) and the subsequent global financial and banking crisis (2007–2009) sparked a genuine gold renaissance. These events were followed in rapid succession by the Eurozone crisis (2010–2014), the COVID-19 pandemic (starting in 2020), and conflicts in Europe (starting in 2022). Between the 1970s and 2024, gold’s inflation-adjusted value thus increased eightfold.

Is gold—the "crisis metal"—suitable for catastrophic scenarios?

Historically, gold has repeatedly proven to be a particularly resilient asset class during times of crisis, while conversely, stocks often lose significant value during turbulent periods. Nevertheless, the study’s authors noted that gold does not always guarantee steady value appreciation, as its price can fall again once a crisis has passed. Therefore, while it makes sense to include gold in a diversified portfolio, one should never rely on it exclusively.

Gold can serve as a practical form of insurance in the event of a catastrophe. The study experts cited displacement caused by war as one example: Gold has a recognised value and is prized as a valuable resource across much of the world. Consequently, in the event of a wartime displacement, it can serve as a reliable currency in the event of displacement. However, gold is also heavy and takes up space; so small-denomination coins or gold jewellery might prove a wiser choice when fleeing such events.

Gold as an asset within an overall portfolio

So what percentage of gold should an investor hold? As regards a passive allocation, ChatGPT outlines the following scenario for Swiss investors: A balanced portfolio would consist of 52.5% equities, 35.5% bonds, and 12% gold. But do these figures align with real-world practice?

The Federal Statistical Office has estimated the combined financial assets of all Swiss households as 2,500 billion Swiss francs, and a 2024 survey conducted by the University of St. Gallen found that the value of gold holdings among the Swiss population amounts to approximately 15 billion CHF. This means that gold accounts for less than 1% of total financial assets. However, the Hens and Amstein study uses various calculation models to demonstrate that, from a financial-economic perspective, this share should actually be at least ten times higher. For instance, the Capital Asset Pricing Model (CAPM)—the most widely recognised financial market model—suggests a figure of 12% (as previously mentioned).

Another calculation is based on the “buy-and-hold” approach whereby investors must decide whether to simply buy gold and hold it, or regularly rebalance the gold proportion of their portfolio in conjunction with other investments. A classic buy-and-hold strategy is not really suitable for long-term wealth accumulation. Consequently, any gold allocation should be in the range of 1 to 4%, depending on whether or not taxation is taken into account.

However, the situation changes with a dynamic rebalancing strategy. In this scenario, assets are distributed across various investments, and the asset allocations are consistently maintained despite market fluctuations. Experts believe this significantly increases what would be the recommended gold allocation: For internationally diversified investors in Switzerland, the recommended share would be 17%—or up to 26% with taxes on all asset classes factored in.

Counterparty risk associated with gold contracts

When building wealth over the longer term, the regular shifting of assets between stocks and gold—as part of a rebalancing strategy—can be executed using gold contracts (such as ETFs, futures, or certificates) rather than physical gold. This approach helps reduce transaction costs. However, such a strategy can entail counterparty risks. This is particularly relevant for gold contracts, because their value always depends on the stability of the issuing bank or clearing house. By contrast, physical gold holdings avoid such risks. Investors would therefore do well to carefully weigh the costs and benefits of their specific rebalancing strategy. Despite its higher storage and transaction costs, physical gold can still prove to be advantageous.

Taxation in Switzerland: Gold can offer advantages

Another aspect addressed by this Swiss gold study is taxation in Switzerland, and the Swiss tax system is indeed favourable for gold. While investors must pay taxes on interest and stock dividends, gold itself generates no taxable investment income. Capital gains are also not taxed. So the Swiss tax system helps to offset any perceived disadvantages of gold investments.

Moreover, the purchase and sale of physical gold investment products (bullion) are also exempt from value-added tax (VAT), subject to a few exceptions. However, all precious metals should be included in the total assets that Swiss citizens must declare in their annual tax returns for the calculation of wealth tax.

Are Bitcoin and tokens the New Gold?

Cryptocurrencies such as Bitcoin have enjoyed increasing popularity since their market launch in 2009. Indeed, this digital currency shares certain characteristics with gold—such as a total supply capped at 21 million units, of which approximately 20 million have currently been mined. However, any further similarities with this precious metal end right there; Bitcoin is highly volatile, lacks crisis resilience, and—due to its relatively recent inception—has a limited track record and data history. In addition, according to the study’s authors, cryptocurrency faces numerous challenges, such as inconsistent international regulations and limited utility as a means of payment or a store of value. Due in part to its niche nature, experts believe that passive investors should hold less than 1% of their assets in Bitcoin or other cryptocurrencies.

The authors find similar arguments regarding blockchain technology and the trading of gold tokens. These tokens represent ownership claims to physical gold, Blockchain technology thereby offers new possibilities for trading gold. Underlying this is a secure and transparent record of all transactions within a network. Compared to ETFs, blockchain offers lower transaction costs and easy access via digital wallets. Nevertheless, physical backing by gold—and control over that asset—remains essential. At the same time, and despite growing interest, this new technology still faces regulatory uncertainties.

How sustainable is gold in the 21st century?

Gold is a commodity that is virtually indestructible. In theory at least, this means all the gold ever mined and sold still exists, and thus could be recovered and processed into new products at any time. This is a significant feature because primary extraction continues to cause substantial environmental and social issues. These problems affect both industrial large-scale mining (LSGM) and artisanal and small-scale gold mining (ASGM).

This is where secondary extraction (recycling) offers some advantages. According to the gold study, recycled gold now accounts for 27% of the total gold supply. Fairtrade gold also offers other sustainable options, such as certifications, fair wages, the elimination of child labour, and the safe handling of chemicals. However, the organisations involved also face challenges as regards end-to-end traceability, high certification costs, and relatively low market demand.

Experts believe technologies like blockchain could help here too, by improving supply chain transparency and promoting gold that meets ESG standards. These ethical and environmental standards—the Environmental, Social and Governance (ESG) criteria defined by the World Gold Council—could help minimise the potential negative impact of unregulated gold mining.

Conclusion: Gold plays an important role in long-term wealth accumulation!

The University of Zurich’s study on gold concludes that the metal is important for long-term wealth accumulation. It serves not so much as a “return driver” within a portfolio, but rather as an insurance policy that helps investors remain financially flexible during times of crisis. Consequently, gold should account for 10 to 20% of an asset allocation. The study’s authors also recommend holding physical gold to avoid the potential counterparty risk associated with gold contracts.

To better accumulate wealth over the longer term, financial experts also advise against simply leaving gold to sit in a vault forever; instead, they suggest selling off portions during times of crisis. A balanced strategy also ensures an optimal portfolio. And due to its volatility and uncertain legal landscape, the authors consider new assets—such as Bitcoin or tokenised gold—unsuitable for long-term wealth accumulation.