03 Jun 2025
Humans have been fascinated by gold for over 6,000 years with the first known gold artefacts dating back to around 4,000 BC in Eastern Europe. It has been used as currency, art, jewellery, and a symbol of power across every major civilisation. Gold doesn't tarnish, rust, or corrode and is one of the most chemically stable elements on Earth, which is why it's been treasured for millennia and used to store value through wars, recessions, and currency collapses.
After World War 2 and up until 1971, gold was the global standard of money as under the Bretton Woods system, the US dollar was pegged to gold, and most other currencies were pegged to the dollar. After the US dropped the gold standard, fiat currencies began to dominate but gold remained the ultimate fallback.
In a time of growing global uncertainty and financial market volatility, investors are once again turning to gold, but why now? And how does gold fit into a modern investment portfolio? Let’s unpack the recent run-up in the gold price and what it means for portfolios today.
After the three major credit ratings agencies downgraded the US from its top-tier rating, investor confidence in traditional financial instruments like US Treasuries has wavered, triggering red flags for investors and increasing the appeal of tangible assets like gold.
Why is gold seen as a haven during uncertainty? If you gathered every ounce of gold ever mined in human history, it would fit into a cube just 23 meters (75 feet) on each side — roughly enough to sit on the centre circle of a football pitch. That scarcity gives it intrinsic value that can’t be devalued by governments or printed into inflation like fiat currency. Currencies are vulnerable to manipulation, inflation, or even sanctions, but gold is a physical asset so there’s no ambiguity - if you hold it, you own it.
How does gold perform when it comes to inflation and currency risk? Gold may be volatile in the short term because it's a traded commodity, but its long-term trend is generally positive. Historically, gold has held its value incredibly well and tends to shine brightest when other asset classes struggle, making it an excellent portfolio diversifier.
Beyond market volatility, there are geopolitical shifts happening that reinforce the importance of gold; after Russia’s invasion of Ukraine, the US froze Russian-held assets and China is currently rethinking how much US debt to hold. In a political conflict, assets can become worthless, driving countries to buy more gold as a form of economic protectionism. If your reserves are in gold, they’re untouchable - beyond the reach of sanctions. Strategic thinking of this ilk fuels long-term demand for the metal.
All this begs the question - are we seeing a shift away from the US as the global economic leader? There are signs of de-globalisation, with countries becoming more economically self-reliant. The world is reconsidering America’s place at the top which is accelerating demand for hard assets like gold, especially as trust in government debt weakens and bond yields rise, meaning governments must pay more to borrow money.
Why is such a traditional asset trending on social media? Gold has had a resurgence in the public eye and is even being compared to cryptocurrency with some calling it ‘the original digital gold.’ Retail interest is growing too - everyday investors are jumping in, recognising its value in today’s climate. In the US, you can even buy small gold bullions at Costco!
So, what’s the takeaway for investors today? The price of gold can fluctuate in the short term, but it has long been valued for its ability to provide stability and balance over time. In an era of currency shifts, inflation, and global uncertainty, gold offers a tangible asset that can help preserve wealth. We believe a small allocation to gold can play an important role in helping to cushion portfolios during market stress. It’s not the hero of every portfolio, but in times like these, it can act as a quiet performance differentiator.
Gold demand has surged in recent years, driven by rising global uncertainty, geopolitical tensions, and declining confidence in traditional financial systems. Central banks, especially in countries like China, Turkey, and India, are buying gold at record levels to reduce reliance on the US dollar and safeguard reserves from potential sanctions. Meanwhile, retail investor interest has grown, with physical gold becoming increasingly accessible. As a tangible, finite asset, gold is increasingly viewed as a strategic hedge and a symbol of financial resilience in an unstable world.
Gold may not be new — but it’s never been more relevant. Whether you’re a seasoned investor or just looking for ways to hedge uncertainty, it's worth considering how a touch of gold might add sparkle and strength to your portfolio.
Jon Lycett, Key Accounts Manager
Katie Sykes, Client Engagement & Marketing Manager
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