Gold is glittering for good reasons. Here’s why it still fits in your portfolio.

Gold is Glittering for Good Reasons: Here’s Why It Still Fits in Your Portfolio

By Steven Orlowski, CFP, CNPR

04/05/2025

In a world where markets swing with the latest headline and geopolitical tensions can send investors scrambling, one asset continues to shine with enduring appeal: gold. While modern investing often favors technology stocks and innovative ETFs, the age-old allure of gold remains not just emotional, but fundamentally strategic. Gold is glittering for good reasons—and it still deserves a place in your portfolio.

A Hedge Against Volatility

Gold’s primary value in a portfolio isn’t about massive short-term gains. Instead, it acts as a stabilizer—a financial anchor when stormy seas arise. Historically, gold has had a low correlation with stocks and bonds. When markets tank, gold often holds its value or even appreciates, providing a counterbalance in your asset allocation.

This was especially evident during the 2008 financial crisis and again in the early stages of the COVID-19 pandemic. While equity markets plunged, gold prices surged, offering investors a cushion against losses.

Protection from Inflation and Currency Risk

Gold is frequently referred to as an inflation hedge—and for good reason. When inflation rises and paper currency loses purchasing power, gold tends to rise in value. It has an intrinsic worth that isn’t tied to any central bank’s balance sheet, which makes it particularly valuable during times of fiscal excess and loose monetary policy.

With inflation still lingering above central banks’ comfort zones in many parts of the world, gold can serve as a form of insurance. It’s also a smart defense against currency devaluation, especially for investors holding assets in countries with volatile or weakening currencies.

A Safe Haven in a Turbulent World

Geopolitical instability, wars, pandemics, trade tensions—when the global order feels uncertain, gold tends to shine. Unlike paper assets, gold is a tangible store of value, and investors flock to it when faith in other markets wanes.

Recent global events, including conflicts in Eastern Europe and the Middle East, have reignited interest in gold as a safe haven. Central banks around the world, including those in China and India, have been steadily increasing their gold reserves—a strong vote of confidence in the metal’s enduring worth.

Portfolio Diversification That Works

Even in a modern portfolio, gold plays a crucial role in diversification. A small allocation—typically between 5% and 10% depending on your risk profile—can enhance returns over time while reducing overall volatility. Gold ETFs and other gold-backed securities have made it easier than ever to access the metal without the hassles of physical ownership.

The Bottom Line

While gold may not generate income like dividends or yield like bonds, its value lies in what it protects, not what it produces. In an increasingly unpredictable world, having a portion of your portfolio in gold is a time-tested strategy to safeguard your wealth.

So yes—gold is glittering. But it's not just about shine. It's about stability, security, and smart diversification. In today’s investment landscape, those are reasons good as gold.

---

Want to dive deeper into how gold fits your financial plan? Consult a trusted financial advisor to tailor your allocation based on your goals, timeline, and risk tolerance.