👉 The Golden Anchor: Stabilizing Portfolios in a Stormy Economy 🥇

👉 The Timeless Benefits of Owning Gold ⏰

👉 Stacking Up Against Equities: A Tale of Two Markets 📈

During an era of geopolitical tension, never ending inflation and market volatility, investors are starting to become more aware of an ancient asset: Gold.

The precious metal has surged past reached $4,000 per ounce recently with no signs of slowing down.

But gold is more than just a relic of history. It can also be used as a tool for modern portfolios.

In today’s newsletter, we’re going to be exploring golds appeal, the role it plays in diversification and what it’s recent growth might mean for you as an investor.

Gold’s attractiveness lies in its unique properties as an investment. Unlike stocks or bonds, gold doesn’t generate any income. Yet it’s tangible and serves as a store of value, preserving wealth spanning across centuries.

It’s primary benefit? a hedge against inflation.

When fiat currencies lose their purchasing power, gold’s scarcity drives demand upwards, thereby increasing the price.

During high-inflation periods throughout history, like the 1970s, gold’s price rose from $35 to over $120 per ounce, outpacing cash values. This came as a result of President Nixon ending the fixed gold standard and transitioning the U.S. to a fiat currency system, as well as the oil crisis.

The 2020’s have also been a remarkable decade for gold, as the COVID-19 pandemic triggered a 27% rally, with prices climbing from $1,575 per ounce in January 2020 to over $2,000 per ounce by the summer of that same year.

There are plenty of cases such as these throughout history, but its important to understand why the price of gold fluctuates to understand the asset.

Gold acts as a safe-haven asset during periods of economic or political turmoil.

In times of crisis, like the 2008 recession or the 2020 COVID-19 pandemic, it becomes more of an attractive asset as a store of value and stability.

Gold isn’t just something every day investors are interested in, Central Banks also buy and hoard the asset to diversify their reverves and mitigate risks from the dominance of the dollar.

In 2024 alone, Central Banks bought 1,045 metric tons of gold, marking the 3rd consecutive year exceeding 1,000 tons.

Gold isn’t just something you own, it offers psychological comfort as well. You can touch it, feel it, smell it and hold it. Whether its in bars or coins, it provides some counterbalance to digital assets, shielding you against currency devaluation.

For intelligent investors, gold isn’t just a speculative bet, but rather a diversification tool.

History proves golds low to zero correlation with stocks and bonds, which can reduce your portfolios risk without sacrificing long term gains.

Why does it work?

Because of its stability.

In the first 6 months of 2022, the S&P 500 fell 21%, the worst 6-month start to a year since 1970. During that time, gold held steady and helped cushion investor losses.

In short, gold is insurance against the unpredictable.

Gold’s performance over the last 5 years has been nothing short of stellar. In October 2020, gold traded around $1,900 per ounce. Today, gold trades near $4,000 per ounce representing an ~110% increase over a 5 year period (22%/year).

Year-to-date in 2025, gold is up over 50%.

This rally is fuelled by many different drivers:

Gold’s 5 year return of 110% is impressive, but it means nothing unless you’re comparing it to common benchmarks, like the S&P 500 and Nasdaq Composite.

From October 2020 to October 2025, the S&P 500 grew 93.70% while the Nasdaq Composite grew 98.83%.

Gold wins that battle.

Despite these astronomical returns that aren’t being talked about much, golds edge shines in risk metrics.

While equities boom in bull runs, gold offers lower volatility providing steadier compounding over time.

Year to date, gold is up 50% while the S&P 500 is up 14.77% and the Nasdaq Composite is up 19.42%, showcasing its resilience during periods of tariff threats and Fed easing.

With that being said, gold’s rising price can be trouble for stocks.

As a “fear gauge”, its rally signals lower confidence in riskier assets.

Investors tend to pivot to gold during periods of uncertainty. These come in many forms: inflation spikes, policy shifts or recessions. This cause money to flow from equities to more stable assets, like gold.

Analysts have been quick to warn of “stagflationary” risks. Sticky inflation, slowing jobs and Fed rate cuts that could trigger a correction in the market.

Golds low to zero correlation, some would argue even negative, flips to bullishness when stocks start to plummet.

With central banks signalling more easing and trade wars in the future, gold has become an “asset for all occasions” and its quick rise in price foreshadows volatility, spotlighting caution for the overvalued tech-heavy indices.

This isn’t to say you should convert your entire portfolio to gold, but rather consider a small allocation to the asset, maybe 5-10% as a hedge against what might be coming down the road.

History doesn’t repeat itself, but it sure does rhyme.

Alex (The Dividend Dominator)
Founder and CEO of Dividend Domination Inc.
Follow me on Twitter, Instagram and LinkedIn

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