:max_bytes(150000):strip_icc()/GettyImages-21815654181-efaca7b95bf447d9b4338091e9f91a53.jpg "What I’m Telling My Clients About Gold Now")
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Key Takeaways
- Central banks, a nervy macro backdrop, and a weaker dollar have driven gold’s latest surge.
- Despite its reputation, gold isn’t inherently “safe”—historically it has often been more volatile than U.S. stocks, and past spikes were followed by long periods of weak returns.
- Gold doesn’t generate income, so it can preserve value but doesn’t compound wealth like productive assets.
- Owning gold is not essential, and any exposure should be minimal if you insist on owning it.
Gold is going for more than $4,000 an ounce. It’s one of the stories of the year, and what makes it unusual is that stocks are strong at the same time. Turns out that optimism about AI and corporate earnings can coexist with a bid for safety.
Why Gold Is Up and What That Really Means
Central banks have been significant buyers of gold as they diversify their reserves away from the dollar, a trend that began during the pandemic and intensified after sanctions froze Russia’s foreign reserves in 2022. For the first time since the mid-1990s, gold now represents a greater percentage of central bank reserves than Treasuries or even euro assets. At the same time, lower yields and a softer dollar have reduced the opportunity cost of holding an asset that doesn’t pay interest, while geopolitical and policy worries have kept demand strong. It’s a rare split-screen: animal spirits in equities alongside a growing appetite for protection.
That explains why gold is hitting records, but it doesn’t make it “safe.” Since the early 1970s, gold has often been more volatile than U.S. stocks. Past episodes, when gold’s inflation-adjusted price surged—such as around 1980 and 2011—were followed by long stretches of disappointing returns. I’ve always seen gold as a panic room that investors rush to when the world feels unstable—gold can seem like a tangible investment, and that makes some investors feel more in control.
Note
Check out gold’s price history here.
What I’m Telling My Clients
The real problem I have with gold is that it doesn’t do anything—it doesn’t generate earnings or dividends; it just sits there. It may hold value over long periods, but it doesn’t build wealth the way productive assets do. A well-diversified mix of stocks, high-quality bonds, and real assets has a far better record of compounding returns across inflation and interest-rate regimes. Those are the heavy lifters of long-term wealth.
So, I tell clients that owning 0% gold is a perfectly defensible choice. If someone still wants exposure, we treat it as a small diversifier, not a core holding, and keep the allocation at or below gold’s rough share of the global market, which accounts for approximately 5%–6% of the global market value.
The Bottom Line
Gold at $4,000 an ounce makes for a great headline, but you don’t need it to reach your goals.
