It could be pointless to focus too much on the intricacies of the gold market when most traders, investors and gold huggers spend more time looking at young men running in shorts after a small white ball. In order to marry the festive soccer/Fussball/calcio season with gold obsession, we have decided to look at the World Cup history from the viewpoint of a gold investor.

This is the 19th edition of the World Cup. For all the moaning and groaning about the relatively low entertainment quality of the current tournament (and Champions League’s allegedly superior art), there is no denying that this tournament’s history has, for 80 years now, punctuated the narrative of the beautiful game like no other.

From the gold investment perspective, this is an interesting timeline, as it includes the deflationary 1930s, the boom of the 1950s and 1960s, the inflation spikes of the 1970s, the expansion of the 1990s and the most recent, “golden” decade.

We have looked at the World Champions since 1930, assuming that each winning team would have been entitled to an ounce of gold (some actually were). Then we compared the prevailing prices during each of the preceding 18 tournaments, in USD, adjusted for inflation (2009). Finally, we took the timeline into account to see what the best annual return would have been from the gold “awarded” during the historic championship.

When Andrade and Cea’s Uruguay side triumphed in 1930, gold prices were at around $250 (in today’s dollars). An ounce invested there would have returned to this day, on average, an annual 4.9%. But nothing beats the Brazil of Gerson, Tostao and Pele, whose 1970 final against Italy would have vested them with gold at $200 dollars and a return of over 500% since (a creditable 13% per annum).

The Italian squad, despite winning the World Cup four times, would have had a somewhat poor timing in terms of the market entry. Captained by Meazza, the legendary Squadra Azzura of the 1930s’ would have picked gold at $540 and $520 per ounce in today’s dollars, yielding meager annual returns since. When Paolo Rossi’s team knocked out Canarinhos and eventually clinched the title in 1982, gold was at $930/oz, and woe to anyone spending the next 20 years paying for the vault and insurance. Yet whoever thinks that the Azzuri are a good contrarian indicator for the subsequent performance of the gold market, should think again. When Cannavaro’s side beat the head-butting France four years ago, gold hovered around $640 in real terms, giving the Italians a handsome 23% return annually since then.

But it is the Brazilians who somehow outperform any competition in terms of the timing of their investment. Ronaldo and Rivaldo’s 2002 team would have made a shocking 31.5% annual return from gold received at the Japan/Korea Championship. Three-time champions Germany are less lucky. Their last gold (1990, starring Matthaeus and Voeller) would have brought them only 3.8% annual return since, and the hirsute Beckenbauer-Breitner-Mueller legends from 1974 would have not even scored half of the returns generated by the Brazilian gold four years earlier.

Argentina’s entry into the gold market would have been even more unimpressive. Both the Kempes-Passarella champions of 1978 and the Maradona-Valdano teams of 1986 won when the inflation-adjusted gold prices were relatively high, at $560/oz and 640/oz, respectively. As a result, the English team’s investment form their unique title during the Bretton Woods’ era 1966 Championship would have outplayed the Argentines by a cumulative 200%. Even Zidane’s 1998 France comes close to the Argentine result, in terms of cumulative gains from Championship-timed entry into the gold market.

In terms of cumulative investment performance per achieved World Cup win, England appears as the undisputed champion, followed by Brazil and Uruguay. It is Argentina that closes this highly unscientific ranking. The numerous fans of Lionel Messi’s uebermenschlich footwork may think again what they are wishing for. Argentina’s win, despite the country’s name, may not be a good thing for precious metals’ future.

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Tags: inflation adjusted gold returns, Long time gold prices, Soccer World Cup and gold