Gold vs Stocks UK: FTSE 100 Comparison, Returns & Which to Choose in 2026
Gold has risen far more than the FTSE 100 over the last 20 years, even after counting dividends. But shares pay dividends and can grow tax-free inside ISAs. This guide compares both for UK investors with performance data, tax implications, and a framework for choosing.
The Short Answer
Gold in sterling rose 987% over the 20 years from the end of 2005 to the end of 2025, well ahead of the FTSE 100's total return of about 273% with dividends reinvested. But the FTSE 100 pays a 3.05% dividend yield (FTSE Russell, 28 August 2026), and shares can compound tax-free inside ISAs and SIPPs, which makes them better suited to income investors. The smartest approach for most UK investors is to hold both: stocks for growth and income, gold for crisis protection and tax-free gains via Sovereigns. Your ideal split depends on age, risk tolerance, and how close you are to retirement.
Gold vs FTSE 100: Side-by-Side Comparison
| Category | Gold | FTSE 100 Stocks |
|---|---|---|
| 20-Year Return (end-2005 to end-2025) | +987% (GBP, no income) | +76.8% price only / about +273% with dividends reinvested |
| 10-Year Return (end-2015 to end-2025) | +353% (GBP, no income) | +59.1% price only / about +133% with dividends reinvested |
| Dividend Yield | 0% (no income) | 3.05% (FTSE 100, FTSE Russell, 28 Aug 2026) |
| Volatility (5 years to Aug 2026) | 16.1% a year (monthly LBMA GBP prices) | 10.2% a year (FTSE Russell, monthly data) |
| Worst Calendar Year Since 2000 | -28.9% (2013) | -31.3% (2008, price return) |
| Crisis Performance | Rose in 8 of the 9 years since 2000 when the FTSE 100 fell | Fell in 9 of the 26 years from 2000 to 2025 (price return) |
| UK Tax (Best Case) | Sovereigns: CGT-free / ETF in ISA | Shares in ISA: CGT-free |
| Minimum Investment | About £104 of gold in a 1g bar (21 Sep 2026 LBMA price), plus dealer premium | ~£1 (fractional shares) |
| Income Generation | None | Dividends (reinvest or withdraw) |
| Inflation Record | Beat UK CPI from end-2005 to end-2025 (+987% vs +77.6%), lagged it from end-2020 to end-2023 (+17.3% vs +21.1%) | Total return beat UK CPI in both periods (about +273% and +34%) |
| Liquidity | High (daily via dealers or ETFs) | High (market hours, T+2 settlement; T+1 from October 2027) |
| Regulation | Well-established (LBMA, VAT-exempt) | FCA-regulated, FSCS protection |
Reading This Table
Gold wins on long-run returns and crisis performance. Stocks win on income, lower volatility, minimum investment, and regulatory protection. Several categories are essentially tied. The highlighted cells show which asset has the advantage. The real insight is that they complement each other in a portfolio.
20-Year Performance: Gold vs FTSE 100 in Hard Numbers
The headline comparison is striking: gold has dramatically outperformed the UK stock market over the last two decades. But the full picture involves dividends, timing, and the critical question of which period you measure.
£10,000 in Gold (end of 2005)
£10,000 in FTSE 100 (end of 2005)
The FTSE 100 index level tracks share prices only, so the 76.8% figure is the price return. With dividends reinvested, FTSE Russell's total return figures give about 273% over the same 20 years. Reinvested dividends account for most of the return a UK equity investor received.
But Timing Matters Enormously
An investor who bought the FTSE 100 near its March 2009 low (just above 3,500) saw the index reach 9,931 by the end of 2025, about 2.8 times that level, before counting dividends. Someone who bought at the end of 1999 (6,930) waited until February 2015, more than 15 years, for the index to close above that level. Gold buyers faced the same problem: gold in sterling peaked at £1,182.82 in September 2011 and did not go above that level again until August 2019. The period you measure changes the result.
Returns by Time Period
All periods run from one year-end to another. Gold = LBMA PM price in sterling. FTSE “Capital” = price return only, from year-end index closes. “Total Return” = including dividends reinvested, compounded from FTSE Russell's published annual total returns. FTSE Russell's factsheets do not give year-by-year total returns for 2000 to 2007, so the first row has no total return figure. The gap between the two FTSE columns shows how much dividends matter for equity investors.
| Period | Gold Return | FTSE Capital (price only) | FTSE Total Return (incl. dividends) | Verdict |
|---|---|---|---|---|
| End-1999 to end-2010 (the lost decade) | +406% | -14.9% | Not available | Gold far ahead; the FTSE 100 fell in price terms |
| End-2010 to end-2015 | -21% | +5.8% | +26.9% | Stocks ahead; gold fell from its 2011 high |
| End-2015 to end-2020 | +94% | +3.5% | +26.3% | Gold ahead, helped by the Brexit vote and COVID |
| End-2020 to end-2025 | +134% | +53.7% | +84.6% | Gold ahead; both rose strongly in 2025 |
| Full 20 years (end-2005 to end-2025) | +987% | +76.8% | About +273% | Gold far ahead, even with dividends reinvested |
The “Lost Decade” for UK Stocks (end-1999 to end-2010)
The FTSE 100 ended 1999 at 6,930 and ended 2010 at 5,900, a price fall of 14.9% over 11 years. UK consumer prices rose 25.6% over the same period (ONS CPI, December 1999 to December 2010), so the index lost value in real terms before dividends. Over the same years, gold in sterling rose from £179.61/oz to £909.53/oz, a gain of 406%. This period explains why long-run comparisons that start around 2000 favour gold so strongly: UK share prices fell, while gold rose through the 2008 financial crisis, quantitative easing, and the start of the eurozone debt crisis.
Year-by-Year: Which Asset Won?
| Year | Gold (GBP) | FTSE 100 (price return) | FTSE 100 (total return) | Winner |
|---|---|---|---|---|
| 2016 | +31.1% | +14.4% | +19.1% | Gold |
| 2017 | +2.4% | +7.6% | +11.9% | FTSE |
| 2018 | +5.0% | -12.5% | -8.7% | Gold |
| 2019 | +14.3% | +12.1% | +17.3% | FTSE |
| 2020 | +20.4% | -14.3% | -11.5% | Gold |
| 2021 | -3.7% | +14.3% | +18.4% | FTSE |
| 2022 | +12.7% | +0.9% | +4.7% | Gold |
| 2023 | +8.0% | +3.8% | +7.9% | Gold |
| 2024 | +27.8% | +5.7% | +9.7% | Gold |
| 2025 | +55.9% | +21.5% | +25.8% | Gold |
The Scorecard
Gold beat the FTSE 100 in 7 of the 10 years from 2016 to 2025 when dividends are counted, and in 8 of the 10 on price return alone (2019 goes to the FTSE 100 once dividends are included). The FTSE 100 won in 2017, 2019 and 2021. 2023 was close: gold rose 8.0% and the FTSE 100 returned 7.9% with dividends. The winner column compares gold with the FTSE 100 total return, because gold pays no income.
The Dividend Argument: Why Stocks Deserve a Fair Hearing
Gold generates zero income. No dividends, no interest, no rental yield. For investors who need cash flow — particularly retirees — this is a genuine disadvantage. Stocks deserve a balanced hearing on this point.
FTSE Russell puts the FTSE 100's dividend yield at 3.05% (data as at 28 August 2026). At that yield, a £100,000 FTSE 100 tracker would pay about £3,050 a year in dividends before tax and fund charges.
- Compound effect: From the end of 2005 to the end of 2025, the FTSE 100 rose 76.8% in price. With dividends reinvested, the return was about 273%, so reinvested dividends produced most of the gain
- Income in retirement: Many retirees rely on FTSE dividend income to cover living expenses. Gold cannot provide this
- Long dividend records: Companies such as Unilever and AstraZeneca have paid dividends for decades
- Tax-free in ISA: Dividends received within an ISA are tax-free. Outside an ISA, only the first £500 a year is covered by the dividend allowance
Gold pays nothing — but its capital appreciation has more than compensated in recent decades. There are also practical workarounds to the income problem:
- Capital growth has outpaced dividends: Gold in sterling rose 987% from the end of 2005 to the end of 2025, well above the FTSE 100's total return of about 273% over the same period with all dividends reinvested
- Sell for “income”: You can sell small amounts of gold periodically. Sovereigns suit this: each is worth about £800 (September 2026), a convenient amount to sell for expenses
- CGT-free withdrawals: Selling Sovereigns for living expenses means zero tax on those “withdrawals”, unlike dividend income outside an ISA, which is taxed above the £500 dividend allowance
- No dividend cuts: By the end of September 2020, 35 FTSE 100 companies had cut, deferred or cancelled dividends because of COVID (AJ Bell). Gold cannot cut its “dividend” because it never promised one
The Honest Assessment
For retirees who need regular, predictable income without selling assets, FTSE dividend stocks inside an ISA are hard to beat. But for investors focused on total return, gold's price growth has been much stronger than the FTSE 100's total return over the last 20 years. The ideal approach for many investors is to hold dividend-paying stocks for income and gold for capital preservation and crisis protection. They solve different problems.
Crisis Performance: When Each Asset Shines
The true value of gold in a portfolio becomes clearest during market crises. Stocks usually grow in value when the economy is doing well, but they can fall sharply when it weakens. Gold tends to do the opposite. Here is the evidence from the four most significant UK market events in recent history.
Global Financial Crisis
Lehman Brothers collapse triggered the worst banking crisis since 1929. Gold rose 4.3% in dollars in 2008 but 43.3% in sterling, because the pound fell sharply against the dollar. FTSE investors who sold at the bottom locked in large losses.
Brexit Referendum
On 24 June 2016 the pound fell to its lowest level against the dollar since 1985 and ended the day about 8% lower. Gold, priced in dollars, rose 12.2% in sterling from the 23 June to the 24 June LBMA PM price. The FTSE 100 fell about 8% in the first minutes of trading and closed 3.2% lower, then recovered as the weaker pound raised the sterling value of overseas earnings: it ended 2016 up 14.4%. Gold in sterling ended 2016 up 31.1%.
COVID-19 Pandemic
The FTSE 100 fell 25% in the first three months of 2020, its largest quarterly fall since 1987, as lockdowns hit the global economy. Gold in sterling fell 7.4% between 24 March and 1 April, then rose as central banks launched large QE programmes. Gold finished 2020 up 20.4% in sterling, while the FTSE 100 ended the year down 14.3%.
Inflation & Rate Hikes
Rising interest rates made gold less attractive to hold, and the dollar gold price ended the year almost unchanged (+0.4%). But the pound fell against the dollar, so gold in sterling rose 12.7%. Energy shares kept the FTSE 100 slightly positive, while the FTSE 250 lost 17.4% including dividends (FTSE Russell).
The Pattern
Gold has tended to hold up when UK shares fall, while shares provide long-term growth and income. In 2008 and 2020, gold in sterling rose over the calendar year while the FTSE 100 fell. On the day after the Brexit vote, gold rose 12.2% in sterling while the FTSE 100 fell 3.2%. In 2022 the FTSE 100 was almost flat and gold in sterling rose 12.7%. Since 2000, gold rose in sterling in 8 of the 9 calendar years in which the FTSE 100 fell (the exception was 2015). This is why holding both can reduce the swings in a portfolio's value: after a year in which shares fall and gold rises, you can rebalance by selling some gold and buying shares at lower prices.
UK Tax Treatment: The Key Differentiator
Tax is where this comparison gets genuinely interesting for UK investors. Both gold and stocks offer tax-efficient routes — but they work differently, and understanding these differences can save you thousands of pounds. Most competitor guides skip the detail here. We will not.
Gold: UK Tax Rules
- Sovereigns & Britannias: Completely exempt from Capital Gains Tax as UK legal tender. Buy for £1,000, sell for £50,000 — zero tax owed. No limit on gains. This is the single most tax-efficient way to hold gold in the UK.
- Gold ETFs in Stocks & Shares ISA: All gains within the ISA are completely tax-free. iShares Physical Gold ETC (SGLN) and Invesco Physical Gold ETC (SGLD) are popular choices. Annual ISA allowance: £20,000.
- Gold ETFs outside ISA: Subject to CGT with the annual exempt amount (currently £3,000). Basic rate: 18% on gains. Higher rate: 24%.
- Physical gold bars: Subject to CGT unless sold at a loss. The £3,000 annual allowance applies. No stamp duty on purchase.
- VAT: Investment gold is VAT-exempt in the UK. This covers bars of at least 995 purity and gold coins of at least 900 purity minted after 1800 that are or were legal tender, such as Sovereigns (916.7) and Britannias.
Stocks: UK Tax Rules
- Shares in Stocks & Shares ISA: Completely CGT-free on all gains. Dividends also tax-free within the ISA. Up to £20,000 per year can be added. This is the primary tax shelter for equity investors.
- Shares in SIPP/Pension: Tax-deferred. Income tax relief on contributions (20% or 40%). Gains and dividends are tax-free inside the pension. Taxed as income on withdrawal (25% of pot is tax-free).
- Shares outside ISA: CGT on gains above £3,000 annual allowance (18% basic rate, 24% higher rate). Dividend allowance of £500 per year. Since April 2026, dividends above the allowance are taxed at 10.75% (basic), 35.75% (higher), or 39.35% (additional).
- Stamp duty: 0.5% stamp duty on UK share purchases. This is an upfront cost that gold does not have. Buying £100,000 of UK shares costs £500 in stamp duty alone.
- FSCS protection: Investments held with FCA-authorised brokers are protected up to £85,000 if the broker fails. Gold dealers do not offer equivalent protection.
Tax Scenarios Compared
Gold
£0 CGT. Sovereigns and Britannias are UK legal tender — completely exempt from Capital Gains Tax regardless of gain size.
Stocks
N/A — Sovereigns have no stock equivalent with automatic CGT exemption.
Gold
N/A — physical gold cannot be held in an ISA.
Stocks
£0 CGT. Gains within a Stocks & Shares ISA are completely tax-free.
Gold
£50,000 - £3,000 allowance = £47,000 taxable. Higher rate (24%): £11,280 CGT.
Stocks
N/A — this row compares gold bars specifically.
Gold
N/A — this row compares shares specifically.
Stocks
£50,000 - £3,000 allowance = £47,000 taxable. Higher rate (24%): £11,280 CGT. Plus 0.5% stamp duty was paid on the original purchase.
Gold
Gold ETF in ISA: £0 tax on all gains. Fully sheltered. But uses ISA allowance (£20,000/year).
Stocks
Shares in ISA: £0 tax on all gains. Dividends also tax-free inside ISA. Also uses ISA allowance.
Gold
Gold ETF in SIPP: tax-free gains plus income tax relief on contributions. Cannot normally access until age 55 (57 from 6 April 2028).
Stocks
Shares in SIPP: identical tax treatment. Tax-free gains plus income tax relief. Same access restrictions.
The Optimal Tax Strategy: Use Both Shelters
The smartest approach combines Sovereigns outside an ISA (already CGT-free) with stocks inside your ISA (sheltering dividends and gains that would otherwise be taxed). This way you use your £20,000 ISA allowance where it saves the most tax — on dividend-paying equities — while getting CGT-free gold exposure without touching your ISA limit. If you want paper gold too, consider a gold ETF inside your SIPP for the added benefit of income tax relief on contributions. For a detailed guide, read our Tax-Free Gold UK Guide.
Gold in a Pension/SIPP: The Angle Competitors Miss
Most comparisons of gold vs stocks ignore the pension angle entirely. This is a mistake, because holding gold in a SIPP combines two powerful tax advantages: income tax relief on contributions and tax-free growth on the gold itself.
Gold ETFs (Simplest Route)
Most SIPP providers (Hargreaves Lansdown, AJ Bell, Interactive Investor, Vanguard) allow you to buy gold ETFs within your pension. Popular options include iShares Physical Gold ETC (SGLN) and Invesco Physical Gold ETC (SGLD). These are physically backed — your ETF shares are underpinned by real gold bars in London vaults.
Allocated Physical Gold
Some specialist SIPP providers allow allocated physical gold through services like BullionVault or The Royal Mint. This is less common and typically involves higher fees, but gives you direct ownership of specific gold bars.
Gold Mining Shares
You can hold shares in gold mining companies (for example Fresnillo and Endeavour Mining) within any SIPP. These provide leveraged exposure to gold prices: they tend to rise more than gold in bull markets but fall more in bear markets.
Basic Rate Taxpayer
Contribute £10,000 to SIPP. Government adds £2,500 in tax relief (20%). You now have £12,500 of gold exposure. All gains are tax-free within the pension. Effective cost: £10,000 for £12,500 of gold.
Higher Rate Taxpayer
Contribute £10,000 to SIPP. Claim additional 20% back via self-assessment. Total relief: 40%. Net cost: £6,000 for £10,000 of gold. All gains tax-free inside the pension.
The Catch
You cannot normally access SIPP funds until age 55 (rising to 57 from 6 April 2028). When you withdraw, 75% is taxed as income. So it is not truly “tax-free”; it is tax-deferred. Best for long-term retirement planning, not short-term gold exposure.
Practical SIPP Gold Strategy
For most investors, the simplest approach is to allocate 10-20% of your SIPP to a gold ETF. If your total pension is £200,000, that means £20,000-£40,000 in a gold ETF alongside your equity and bond funds. Rebalance annually. The gold allocation provides crisis protection within your retirement pot while still benefiting from the tax relief on contributions. For a comprehensive guide, read our Gold in ISA, SIPP & Pension Guide.
Portfolio Allocation: The Case for Holding Both
The strongest argument in this debate is not gold or stocks — it is gold and stocks. Modern portfolio theory demonstrates that combining assets with low or negative correlation reduces overall portfolio risk without necessarily sacrificing returns.
8 of 9
FTSE 100 down years since 2000 in which gold rose in sterling
The exception was 2015
-41.3%
Gold's largest fall in sterling since 2000
September 2011 to August 2015 (LBMA PM). Gold on its own is not low-risk
3.05%
FTSE 100 dividend yield
FTSE Russell, 28 August 2026. Gold pays no income
Portfolio Models
The Permanent Portfolio
Harry Browne's concept: equal allocation to four asset classes, each designed to perform in a different economic environment.
The aim is steadier returns and smaller falls than an all-equity portfolio, at the cost of lower returns when stock markets are strong.
Practical UK Allocation
A more conventional approach tailored for UK investors, balancing growth with protection.
Adjust gold allocation up (to 20-25%) as you approach retirement. Reduce stocks, increase bonds and gold.
The Rebalancing Strategy
Once a year, review your allocation. If gold has surged and stocks have fallen (as in 2008 or 2020), sell some gold and buy more stocks. You are selling high and buying low automatically. If stocks have risen and gold has fallen (as from 2013 to 2015), trim stocks and add gold. Rebalancing keeps your risk level where you set it, and it means you regularly sell some of whatever has risen and buy some of whatever has fallen, which most investors find hard to do without a rule.
The Hybrid Option: Gold Mining Stocks
For investors who want gold exposure with dividend income, gold mining stocks (or a gold miners ETF like VanEck Gold Miners) offer a hybrid approach. Mining companies pay dividends and their share prices tend to move by more than the gold price in both directions: they usually rise more than gold when it rises and fall more when it falls. This can sit alongside physical gold in a diversified portfolio. Mining shares can be held in an ISA or SIPP just like any other equity, giving you tax-sheltered gold-linked income that physical gold cannot provide.
Who Should Choose What: Investor Profile Framework
Your ideal gold-to-stock ratio depends on your life stage, income needs, risk tolerance, and outlook. Here is a framework for five common investor profiles.
Young Investor — Growth Phase
Time is your biggest advantage. You can afford to ride out stock market crashes and benefit from long-term compounding. Gold plays a small but valuable hedging role.
Stocks: 80-90%
Global equity fund in ISA. Maximise annual ISA allowance. Include emerging markets for growth.
Gold: 5-10%
A few Sovereigns per year or a gold ETF in SIPP. Insurance against major crashes in your equity portfolio.
Mid-Career — Balanced Phase
Retirement is within sight. You need growth but can no longer afford to start over if a 2008-style crash hits. Gradually increase your gold allocation and reduce risk.
Stocks: 60-75%
Shift towards dividend-paying stocks and global trackers. Keep in ISA. Start building bond allocation too.
Gold: 10-20%
Build Sovereign collection. Gold ETF in SIPP for tax-relieved exposure. This is your portfolio insurance.
Near/In Retirement — Preservation Phase
Capital preservation becomes paramount. You need your portfolio to survive a crash without running out of money. Gold's stability and CGT-free Sovereign sales become highly valuable.
Stocks: 40-55%
Focus on dividend aristocrats for income. Global diversification. Keep in ISA for tax-free dividend income.
Gold: 20-30%
Sovereigns for CGT-free “income” (sell one when needed). Gold ETF in SIPP. Stability during market drawdowns.
Worried About Crashes
If a 30% stock market crash would cause you to panic sell, you need a higher gold allocation. Better to hold less in stocks and actually stay invested than to hold more and bail at the bottom.
Stocks: 40-50%
Lower equity allocation means smaller drawdowns. Choose lower-volatility dividend funds over growth.
Gold: 25-35%
Higher gold allocation provides psychological comfort. Knowing gold tends to rise in crashes helps you hold steady.
Maximising Long-Term Growth
If you have a 20+ year horizon, high risk tolerance, and can genuinely stomach 30-40% drawdowns without selling, a growth-tilted portfolio with minimal gold may suit you.
Stocks: 85-90%
Global equities (heavy US/tech weighting). Maximise ISA each year. Consider small-cap and emerging markets for extra growth.
Gold: 5-10%
Small gold position as portfolio insurance against a large fall in shares.
Key Takeaways
Gold has risen far more than the FTSE 100 over 20 years. From the end of 2005 to the end of 2025, gold in sterling rose 987%, against 76.8% for the FTSE 100's price and about 273% with dividends reinvested. Longer comparisons that start around 2000 also include the FTSE 100's “lost decade”: it ended 2010 14.9% below its end-1999 level. The period you choose matters.
Dividends make up most of the return from UK shares. The FTSE 100 yields 3.05% (FTSE Russell, 28 August 2026), and reinvested dividends turned a 76.8% price rise from end-2005 to end-2025 into a total return of about 273%. For income-dependent retirees, dividend stocks have a genuine advantage.
Gold has tended to rise when UK shares fall. In 2008 and 2020, gold in sterling rose while the FTSE 100 fell, and since 2000 gold rose in sterling in 8 of the 9 years in which the FTSE 100 fell. That makes gold useful for protecting a portfolio in the years when shares do badly.
UK tax treatment favours a combined approach. Sovereigns are CGT-free without using your ISA. Stocks benefit most from ISA shelter (CGT, dividend tax, stamp duty). Use Sovereigns for gold, your ISA for stocks, and gold ETFs in your SIPP for maximum tax efficiency.
Your ideal allocation depends on your life stage. Young investors: 5-10% gold. Mid-career: 10-20% gold. Near retirement: 20-30% gold. Adjust based on personal risk tolerance.
Frequently Asked Questions
Yes, over the last 20 years. From the end of 2005 to the end of 2025, gold in sterling rose 987% (LBMA PM price, £298.20 to £3,240.91 per ounce), turning £10,000 into about £108,700. The FTSE 100 rose 76.8% on price alone over the same period, or about 273% with dividends reinvested (turning £10,000 into about £37,300, based on FTSE Russell total return data). The period you measure matters: from the end of 2012 to the end of 2018, gold in sterling fell 1.8% while the FTSE 100 rose 14.1% on price alone, and reinvested dividends make up most of the FTSE 100's long-run return.
Yes. Gold Sovereigns and Britannias minted by the Royal Mint are classified as UK legal tender, making them completely exempt from Capital Gains Tax under HMRC rules. You can buy a Sovereign, hold it for decades, and sell at any profit with zero CGT liability. This exemption does not apply to gold bars, foreign coins, or jewellery, which are subject to CGT with the standard annual allowance (currently £3,000). This makes Sovereigns one of the most tax-efficient investments available in the UK.
Both can be held in a Stocks & Shares ISA, but the tax logic favours holding stocks in your ISA. Here is why: gold Sovereigns are already CGT-free outside an ISA, so putting gold ETFs in an ISA does not save as much tax as sheltering shares — which would otherwise be subject to CGT, dividend tax, and stamp duty. If you have room for both, hold your equity funds and dividend-paying shares in the ISA first, then use Sovereigns for physical gold exposure outside it. If you prefer paper gold, a gold ETF in an ISA is still a valid, tax-efficient strategy.
Yes, but only indirectly. Most SIPP providers allow you to hold gold ETFs such as iShares Physical Gold ETC (SGLN) or Invesco Physical Gold ETC (SGLD) within your pension. Some specialist SIPP providers also allow allocated physical gold through services like BullionVault or The Royal Mint. The advantage is significant: you get income tax relief on contributions (20% or 40% depending on your tax band), and gains within the SIPP are tax-free. The main limitation is that you cannot normally access pension funds until age 55, rising to 57 from 6 April 2028.
A common guideline is 5-20% of a diversified portfolio in gold, depending on your age and risk tolerance. Younger investors (20s-30s) might hold 5-10% as a hedge while keeping the majority in equities for growth. Those approaching retirement (50s-60s) might increase to 15-25% for stability. The reason to hold some gold is that it has often risen when UK shares fell: since 2000, gold rose in sterling in 8 of the 9 calendar years in which the FTSE 100 fell. The World Gold Council publishes research arguing that a gold allocation has improved risk-adjusted returns in diversified portfolios.
No, at least not for UK investors over recent decades. From the end of 2005 to the end of 2025, gold in sterling rose 987%, while the FTSE 100 returned about 273% with dividends reinvested. From the end of 1999 to the end of 2010 the FTSE 100 fell 14.9% on price alone, while gold in sterling rose 406%. Shares have won in other periods: from the end of 2010 to the end of 2015, gold in sterling fell 21% while the FTSE 100 returned about 27% with dividends. US shares (the S&P 500) have performed much better than UK shares since 2010, so a comparison using US shares would look different. The UK market's heavy weighting towards banks, oil and mining makes it more cyclical than the US market. Your conclusion depends on which stock market and which time period you examine.
Over long periods, yes, but not in every period. Gold in sterling benefits from both global inflation trends and sterling weakness: when the pound falls against the dollar, the sterling gold price rises even if the dollar price is flat. From the end of 2005 to the end of 2025, UK consumer prices rose 77.6% (ONS CPI) while gold in sterling rose 987%. During the 2021-2023 inflation surge, when UK CPI inflation peaked at 11.1% in October 2022, the result was different: from the end of 2020 to the end of 2023, consumer prices rose 21.1%, gold in sterling rose 17.3%, and the FTSE 100 returned about 34% with dividends reinvested. Gold has protected UK investors against inflation over decades, but it can lag inflation for several years at a time.
UK investors can buy physical gold (Sovereigns, Britannias, bars) from established dealers like The Royal Mint, BullionVault, or Chards. For paper gold exposure, gold ETFs such as iShares Physical Gold ETC can be purchased through any stockbroker and held in an ISA or SIPP. BullionVault offers allocated gold storage from as little as 1 gram. For CGT-free gains, focus on gold Sovereigns and Britannias. For the best value, compare dealer premiums — they typically range from 3-8% above spot price for physical gold. Our dealer directory lists 190+ verified UK gold dealers.
Check the Current Gold Price
Whether you choose gold, stocks, or both — start by understanding today's gold price and what your existing gold might be worth. Use our free calculator for an instant valuation.
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Sources
- World Gold Council — Gold Demand Trends and Investment Research
- LBMA — London Gold Price Data and Historical Prices
- London Stock Exchange — FTSE 100 Index Data
- FTSE Russell: FTSE 100 Index factsheet (data as at 28 August 2026): annual total returns 2016-2025, dividend yield, volatility
- FTSE Russell: FTSE 100 Index factsheet (data as at 30 April 2018, archived): annual total returns 2008-2015
- FTSE Group: FTSE 100 Index factsheet (data as at 31 December 2008, archived): 3-year total return to end-2008
- FTSE Russell: FTSE 100 ends 2025 at 9,931.38 points (via Mondo Visione)
- ONS: CPI annual rate (series D7G7) and CPI index (series D7BT)
- YourMoney: AJ Bell Dividend Dashboard on 2020 FTSE 100 dividend cuts
- HMRC — Capital Gains Tax Guidance (including gold and shares)
- HMRC Capital Gains Manual — Legal Tender and Gold Sovereigns
- HMRC — Individual Savings Accounts (ISA) Rules
- HMRC — Tax on Your Private Pension (SIPP Rules)
- Bank of England — Gold Vault and UK Gold Reserves
Founder & Market Researcher
Taro has been actively investing in precious metals and financial markets for over 15 years. Frustrated by the lack of transparent, accurate gold pricing information in the UK, he built London Gold Exchange as a data-driven resource for fellow investors. The site combines real-time market data, verified dealer information from 190+ UK businesses, and insights drawn from years of hands-on experience in the gold market.
- ✓15+ years investing in precious metals & equities
- ✓Built verified database of 190+ UK gold dealers
- ✓Daily market data analysis and price tracking
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Gold and stocks are volatile assets and past performance does not guarantee future results. The value of investments and the income from them can go down as well as up, and you may get back less than you invested. Tax rules are subject to change and depend on individual circumstances. Always consult a qualified tax advisor or independent financial advisor before making investment decisions. London Gold Exchange is an information service and does not buy, sell, or hold gold or shares on behalf of users. All returns stated in GBP unless otherwise noted. Figures current as of 22 September 2026.
Data sources: Gold returns use the LBMA Gold Price (PM) in sterling, measured year-end to year-end. FTSE 100 price returns use year-end index closes (FTSE Russell / LSEG). FTSE 100 total returns, dividend yield and volatility come from FTSE Russell FTSE 100 factsheets; multi-year total returns are compounded from FTSE Russell's published annual figures. UK inflation is ONS CPI (series D7G7 and D7BT).
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