When gold surpassed $4,000 per troy ounce this month, it wasn’t just another headline for the financial pages, it was an historic milestone for investors considering how and when to invest in gold. For many investors, it also raised the big question: is it too late to buy gold?
After all, buying an asset at record highs feels counterintuitive. Has the ship sailed? Is the opportunity gone?
Not necessarily. In fact, this may be precisely when the case for gold becomes clearest – not as a speculative trade, but as a long-term stabiliser in portfolios that are increasingly being tested by inflation, geopolitics and volatile markets.
For decades, investors could rely on a simple formula: when stocks fell, bonds rose. That comfortable correlation broke down in the 2020s. In both 2022 and 2024, equity and bond markets moved down together, leaving “balanced” portfolios feeling anything but balanced.
Gold, by contrast, behaved differently. During those same drawdowns, it not only preserved value but, in many cases, gained. Over the past 20 years, gold’s role as a portfolio diversifier has remained consistent, with its correlation to US equities hovering close to zero (meaning its price often moves independently of traditional financial assets).
Average annualised return |
||||
|
Index |
Last year |
Last 5 years |
Last 10 years |
Last 20 years |
| Gold spot price |
36.0% |
10.9% |
11.6% |
10.7% |
|
S&P 500 |
16.3% |
15.9% |
13.7% |
10.7% |
Total return |
||||
|
Index |
Last year |
Last 5 years |
Last 10 years |
Last 20 years |
| Gold spot price |
36.0% |
67.9% |
200.3% |
669.0% |
|
S&P 500 |
16.3% |
109.0% |
259.9% |
657.3% |
Source: Curvo
Gold’s role is strategic, not heroic. It doesn’t generate income and during strong bull markets it can lag equities. There are also practical considerations such as storage for physical gold or management fees for ETFs and funds, so investors need to understand those implications before deciding how to hold it.
The trade-off is that gold behaves differently to other assets – because it is different – and there are numerous benefits to investing in gold as part of a diversified portfolio.
1. A hedge against inflation
During the inflationary 1970s, gold prices rose dramatically, far outpacing consumer prices as stagflation drove investors towards safe haven assets. More recently, as inflation reemerged in 2021–2022, gold again outperformed most asset classes.
It’s not a perfect hedge as prices do fluctuate year-to-year, but over long cycles, gold’s intrinsic value has kept pace with the rising cost of living in a way few other assets have.
2. Protection against volatility
Gold has historically acted as a form of portfolio “insurance”. During the 2008 financial crisis, while global equities fell, gold – although not immune to volatility – was one of the few assets to post positive returns1 and had fully recovered by the start of 20092. In the early months of the pandemic, it again outperformed3.
3. Sustained demand
In recent years, the largest buyers of gold have been central banks. In 2023, central bank demand hit its highest level in over half a century, with emerging markets like China, Turkey and India leading the way. With global uncertainty fuelling a move away from the US dollar, this trend looks unlikely to slow any time soon.
This isn’t a coincidence – central banks are diversifying their reserves away from US Treasuries and other G7 sovereign bonds as they seek to reduce exposure to the “weaponisation” of the dollar, a fracturing world order and rising US debt levels.
Gold currently represents only around 27% of total global central bank reserves compared with nearly 75% in the early 1980s4, suggesting there is still considerable scope for further accumulation.
Retail investors, too, are being drawn to gold as fiscal deficits grow, sovereign debts climb and concerns about long-term inflation in the US and Europe persist. And because gold’s supply is finite, even modest increases in demand can have an outsized impact on price – a dynamic that helps explain its sharp rise over the past year.
So, is it too late to buy gold?
If your goal is short-term profit, perhaps. Prices can and will fluctuate. Gold has risen spectacularly over the past year, and a period of consolidation or correction would not be a surprise. However, such pullbacks could present an opportunity to accumulate gold at more attractive entry points as part of a long-term strategy focused on diversification and capital preservation.
If your goal is long-term resilience and diversification, then the case for gold is still strong. Over the past few years, a mix of powerful forces has propelled gold higher: stubborn inflation, record sovereign debt, persistent geopolitical tension, and a weakening faith in fiat currencies. None of those dynamics have meaningfully reversed. Central banks continue to accumulate gold at a record pace, real yields remain historically low once inflation is considered, and investors are seeking assets that can hold value across cycles.
In other words, the same conditions that helped push gold through $4,000 per ounce are still in play. Just because gold is at an all-time high doesn’t erase its portfolio utility and the good news is that investors today have multiple ways to invest in gold, whether through physical gold (bullions, coins or bars) or gold ETFs or funds, each offering different levels of liquidity, storage needs and accessibility.
If you’d like to find out more about gold or precious metals, please contact us.
Sources:
1. World Gold Council
2. World Gold Council
3. Forbes
4. Reuters