No one will ever accuse me of being a gold bug.
“It’s the only real money,” the permabulls say.
I’ve never used it to purchase anything. Walk into the sales manager’s office at your local Toyota dealership and plunk down eight gold bars on the desk. See if they’ll hand over the title and keys.
“You want to own gold during a crisis,” they say.
Ask folks who survived World War II in Europe and countless other wars whether their gold and other precious metals and gems held their value.
So why have I been recommending that investors own gold?
Three reasons:
1. Gold is a noncorrelated asset.
That means it doesn’t follow the stock market.
It’s smart to have assets that don’t all move in line with each other. That way, even during tough times, something in your portfolio is usually working.
The Oxford Club recommends that 5% of your portfolio be invested in precious metals – primarily gold and silver – for that exact reason.
2. The dollar is tumbling.
In 2019, the U.S. government paid $375 billion in interest on its debt. This year, that number is expected to be nearly $1 trillion. The interest has already eclipsed our entire defense budget and will soon overshadow spending on Medicare.
The out-of-control spending and deficits are one reason the U.S. dollar is tanking. The other reason is that President Trump wants a weak dollar because it boosts exports.
When the dollar falls, gold rises.
3. Central banks are loading up.
The United States has increasingly weaponized the dollar, freezing dollar-denominated assets of rogue countries like Russia. As a result, foreign central banks are turning to gold to offset their risk of holding dollars that could be seized.
China has been buying gold for the past 14 months, with gold now accounting for 8.5% of its total reserves. Russia owns even more than China.
Poland announced late last year that, despite high prices, it is increasing the percentage of gold in its reserves from 21% to 30%.
You can see that in 2024 and 2025, in every month except one, the world’s central banks bought more gold than they sold.
Ten years ago, 66% of the world’s foreign currency reserves were held in dollars. Today, that number is down to 57%. A few countries, including Kazakhstan and Turkey, have more than half of their reserves in gold.
There is huge demand for gold at the moment. If you don’t own the metal (or gold-related assets), you are missing out on one of the great bull markets of our lives.