On 11 April 2025 the spot price for one troy ounce of gold closed at $3,512.40, a record that eclipsed the previous peak set in March. Traders who bought bullion twelve months earlier locked in a 38 % gain, yet the metal’s role in a portfolio remains contentious.
A safe haven must shield capital when other assets falter. Gold has fulfilled that mandate at times, but it has also languished for decades. Between August 1980 and August 2001 the nominal price slid from $850 to $256, a cumulative loss of 70 % before inflation. During the same span the S&P 500 total return index rose more than ten fold. The lesson – gold protects against specific shocks, not against the passage of time.
From 1 May 2022 to 30 April 2025 bullion rose 42 % in dollar terms. The MSCI World Index advanced 28 %, the Nasdaq-100 31 %. Gold’s edge looks slim once dividends enter the calculation, yet the metal outran both benchmarks during the regional bank turmoil of March 2023 and the October 2023 Middle-East flare up.
âInvestors reach for gold when policy uncertainty spikes,â says James Jeter, founder of Back Bay Financial Planning & Investments in Boston. âNine-tenths of the current move occurred after the Treasury yield curve inverted in October 2024.â
Jeter attributes the rush to four concurrent pressures – widening U.S. fiscal deficits – rising tariff rhetoric, stepped up central-bank purchases by Poland, China along with Turkey, and a Federal Reserve that paused rate cuts. Each factor undercuts paper currencies – buyers gravitate toward a metal that carries no counter party risk.
Fast Fact
HSBC Private Bank reports that clients with more than five million dollars in investable assets raised their combined allocation to physical gold and bullion-backed exchange traded products from 3.8 % of portfolios in December 2024 to 8.7 % in April 2025.
Part of the demand stems from measurable market forces. Real yields on ten year Treasury Inflation-Protected Securities dipped below zero in January 2025 – lowering the opportunity cost of holding a non yielding asset. The remainder traces to emotion. Gold can be weighed, stacked in addition to stored. A share certificate conveys ownership of future cash flows – a gold coin conveys permanence.
âDuring the 1979 oil embargo my father bought Krugerrands,â Jeter recalls. âHe kept them in a safe behind a false wall. That tangible presence gave him more comfort than any stock ever did.â The metal’s value rests on collective belief, not on quarterly earnings – it neither matures nor defaults.
Empirical studies confirm the pattern. Data from the Federal Reserve Bank of St. Louis show that gold delivered positive real returns in eight of the ten quarters when the University of Michigan consumer sentiment index fell below 60. Equities posted losses in seven of those same ten quarters.
Bitcoin apologists label the token âdigital gold.â From April 2015 to April 2025 the compound annual growth rate for bitcoin in U.S. dollars reached 49 %. Gold over the same decade rose 10.6 % per year. The comparison flatters crypto until volatility enters the discussion. Bitcoin’s annualized standard deviation exceeded 75 %; gold’s measured 14 %.
âIn April 2025 both assets spiked as the yen crossed 160 to the dollar,â Jeter notes. âBitcoin added 18 % in forty eight hours – surrendered half the gain within a week. Gold added 4 % and kept it.â The episode illustrates the difference between a twelve year experiment and a five-thousand-year record.
Historical consistency tilts decisively toward gold. During the stagflation decade of 1973-1982 bullion returned 22 % per year after inflation. The NAREIT equity index delivered 5.6 % annualized from April 2015 to April 2025, the iShares U.S. Treasury Bond ETF 1.05 %. Neither figure matches gold’s long cycle performance.
Yet a hedge must remain a side dish, not the meal. âIf gold outruns global equities for thirty consecutive years we have larger problems than portfolio construction,â Jeter warns. From April 2010 to April 2025 the S&P 500 with dividends reinvested compounded at 17.5 % per year. Gold managed 6.5 %.
Jeter limits client exposure to bullion or bullion proxies to between 3 % and 8 % of total assets. The band provides enough ballast in a crisis without muting the growth engine of equities. Rebalancing occurs annually or when the weight drifts more than two percentage points from target.
Investors who wish to own gold face implementation choices. Physical bars carry bid ask spreads near 2 % and storage fees that reach 0.5 % per year. Exchange-traded products such as SPDR Gold Shares charge 0.4 % annually yet track the spot price within five basis points on most days. Closed-end funds trade at discounts or premiums to net asset value – adding a layer of complexity.
A financial planning platform such as eMoney or MoneyGuidePro models outcomes under multiple regimes – deflationary bust, inflationary boom, currency devaluation. The software calculates the probability that a 5 % gold sleeve raises the sustainable withdrawal rate over a thirty year retirement. In most scenarios the benefit appears modest, but the downside protection proves meaningful when the simulation incorporates a 1970s-style inflation shock.
Prospective buyers must also weigh tax treatment. The Internal Revenue Service classifies gold as a collectible. Short-term gains face ordinary income rates – long term gains top out at 28 %. By contrast, long term capital gains on equities peak at 20 % for high earners. The differential narrows the after tax edge of bullion even when pretax returns look favorable.
Central-bank demand adds another wrinkle. The People’s Bank of China reported a nineteenth consecutive monthly increase in gold reserves in April 2025. Official-sector purchases remove supply from the open market and compress forward lease rates, a tailwind for prices. If the pace slows, the metal could surrender part of its recent premium.
Jeter concludes with a rule of thumb – allocate to gold only what you would be willing to hold through a 50 % drawdown without panic. The metal protects against disorderly currency depreciation, geopolitical black swans, and systemic financial stress. It does not compound earnings, pay dividends, or innovate. Treat it as insurance, not as a growth engine.