Kensho Stats

Looking for a safe haven? Here's why gold won't work

Gold ISN'T the safe haven you thought it was

You hear it again and again. When markets get volatile or uncertainties spike, buy gold. It's traditionally considered one of the safer assets because it acts as a store of value. But the precious metal pays neither a dividend, coupon nor rent.

So we crunched the numbers using data analytics platform Kensho to find out whether gold's safe haven status really holds up.

According to statistics going back to 2005, a bet on gold in times of market turbulence is often no better than a coin toss.

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When uncertainty, as measured by the CBOE Volatility Index, surges 80 percent or more in a single month, the precious metal trades negative half the time and on average, it loses more than 1 percent.

A melter casts an ingot of 92.96 percent pure gold at a procession plant of the Olimpiada gold operation, owned by Polyus Gold International company, in Krasnoyarsk region, Eastern Siberia, Russia.
Ilya Naymushin | Reuters

When markets are plunging, gold historically doesn't do much either. Since 2005, the has lost 6 percent or more in one week 18 times. During those five trading days, gold has traded negative 61 percent of the time and lost 0.1 percent on average.

When the Dow drops 6 percent or more in one week (11 instances), bullion does even worse—trading lower 73 percent of the time and falling 1.3 percent on average.

What about when markets abroad become volatile? You'll likely hear gold bugs tout the safety of the metal.

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A mechanic at Newmont Mining works at the company's gold quarry mine near Elko, Nevada.
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But take China, a notoriously volatile stock market over the past year. When its benchmark index, the Shanghai Composite, tanks 10 percent or more in one week, the precious metal is again unreliable. It trades negative about half the time, though it does return a measly 0.2 percent on average.

Ditto for flare-ups in the Greek debt crisis. On days in which the prospect of a Grexit rises significantly, gold typically trades lower.

Some analysts believe there could be more to gold's diminished luster as a safe haven. Markets may be taking a hit, but experts say things aren't that bad, historically.

Some also say a lack of inflation around the world further reduces gold's reputation as a hedge against inflation. And they remind investors that gold is a commodity, susceptible to the broad selloff in the sector we've seen in recent years.

Whatever the reason, the precious metal may be losing its precious status.

Disclosure: NBC Universal, the parent company of CNBC, is a minority investor in Kensho.