Why Advisors Should Add Gold to Client Portfolios Now
(Bloomberg) – Have you found gold? If not, maybe this is the year to get some. While the past five months haven’t been great, with prices down nearly 19 percent, look back over the past few decades and you’ll see that being a gold bug is a very winning strategy. Physical gold has outperformed the US stock market since 2000 and is up nearly 122% over the past five years.
It has a long history of gold. As a place where wealth is stored, it is more important than ever. And with the rise of currencies, gold has never been easier to invest in.
“Touching gold is as close as you’ll get. Touching eternity” comedian and British financial analyst Dominic Frisby put it right. The history of the secret of gold. It does not spoil or destroy. The light never fades. It is malleable, malleable and ductile. It is absolutely impossible to destroy.
Investors are increasingly worried about public debt levels and potential fiscal crises in Western economies. US debt-to-GDP is running at over 120 percent. In the UK, France, Italy and Canada it is at or above 100%. These high credit levels are historically unheard of outside of world war and collapse. What if the United States decided to increase its debt by printing money, devaluing the dollar, and easing the burden in an inflation-adjusted manner?
Holding gold is now part of the long-standing “hedge trade,” a way to insulate your portfolio against the threat that governments might try something radical. Gold doesn’t always work as an inflation hedge, but it does provide some peace of mind that, in the event of a blackout, civil war, or other calamity, it will still be as good as gold.
There’s also a new buyer in town. The shiny metal has been looming large over the past few years as central banks move away from fiat currencies, particularly the dollar. In the year By 2025, the world’s central banks have played their part in buying a record 1,200 metric tons of gold to push the price above $5,000. They bought another 250 metric tons in the first quarter of 2026.
That means central bank purchases have slowed down a bit and some retail investors are selling, perhaps to get into cash as prices rise. Although gold prices are now at $3,983, there is speculation that if inflation picks up gold, it could repeat the decade’s best performance of the 1970s. This is certainly not a given. Gold entered the 1970s dirt cheap, but it would be hard to argue that is the case now. Nothing is risk free.
Regardless of the short-term picture, gold’s long-term record is inevitable. Nowadays, more and more financial advisors consider it a necessity. They tell you to hold 5% of your portfolio in gold, although a more interesting 10% or more is suggested among them. Billionaire hedge fund manager Ray Dalio says go. up to 15%.
What is the correct number? There are two things to consider, said Sebastian Leon, chief investment officer of Troy Asset Management. You need enough of your gold to act as insurance when bad things happen. But when times are good, you don’t want to hold too much as it drags down your performance too much.
Remember, gold has no product. So if you’re not getting capital gains, you’re not getting anything else. Considering all this, anything less than 5% seems very small to me. And anything close to 20% is probably too much. Leon le Troy has a base of 10% in the capital protection portfolios he co-manages, but has lowered it to 8% and raised it to 14%, according to financial and geopolitical risks.
So, how do you get your hands on some gold?
Buying physical gold
If you have too much gold at home or in a vault, there will be costs. The banks will charge you to keep your gold with them, and your insurers will charge you if you keep it at home.
However, if you are holding your gold to protect against high inflation, or calamities (political or natural), physical gold is the way to go. In the US, that might mean bullion shops in Manhattan’s Diamond District, for example. In the UK, dealers in London’s Hatton Garden will sell you any gold bar or coin. And if walking around London doesn’t suit your net worth in your pocket, you can order online.
what do you buy There are a huge variety of coins and bars available in most countries, so buying is a matter of personal preference. In the UK, if you’re worried about tax, make it a gold sovereign – but you’ll pay a premium because they’re classified as legal tender rather than an asset. If you’re saving a lot of money, a few kilo bars (around $130,000 each) will do for you – considering you want to store it in a bank vault (also insured).
But gold reserves will not help you much in times of crisis. You have to save it Physical money in your home For this kind of thing. But other than that, all you need is a 10-pack of five-gram bars, yours is about £6,200 ($8,300) or maybe less for a one-gram bar. Tiny, discreet and only about £130 ($175) each. They will be more valuable in the event of an accident.
In the US you can buy these from Walmart and Costco (online, no less). In the UK, you can find them from most suppliers, sometimes with names such as Barbie Gold, Hot Wheels Gold and Lucky Cat Gold among the brands gift cards. Dubai International Airport is a good place to pick these up. Buy a few one gram bars on your way and use them when the time comes.
Gold E.F.S
If you like the idea of physical gold, but don’t want the hassle or expense of maintaining it, buy a physical gold-backed currency exchange. There are plenty of these associated with $600 billion in real gold. The best of these ETFs closely mirror the price of gold, and they do so at very low prices.
Fidelity-recommended ETFs that do the job include iShares Physical Gold ETC ($78) on their Select 50 Funds list, independent of professional investors. Morningstar notes that all gold ETFs give you the same thing: access to physical gold. But some do it cheaper than others. With that in mind, analysts out there recommend the SPDR Gold MiniShares ETF ($79). Most popular in the UK will be Wisdomtree’s Physical Gold ($373).
Gold miners
Looking for more risk in your gold holdings? The next step is to invest in stocks of gold miners – companies that actually mine and mine the gold you want to be exposed to. If mining costs remain largely constant, mining companies should capitalize on gold prices. When the price goes up, their cost doesn’t go up. So, if handled well, you can deliver healthy responses.
Historically, many mining companies have ruined things for themselves by squandering profits on dig projects and unnecessary capital expenditures. There is some hope that they will show more restraint this time. Remember that owning shares in gold miners is not the same as owning gold. Of course, they mostly move with the price of gold. They are also dynamic and face common corporate issues such as management quality, environment, costs and so on.
If you want to invest in the mining sector, you have to think about the companies individually. Or do it through an ETF or actively managed fund that offers diversification. The Ninety One Global Gold Fund is one to watch – and it’s on. Fidelity’s Select 50 list. Other popular funds include the BlackRock Gold & General Fund (full disclosure, I invest) and the Jupiter Gold & Silver Fund, which also invests in silver bullion. Mining ETFs include the VanEck Gold Miners UCITS ETF ($81) and the iShares MSCI Global Gold Miners ETF ($61). You can buy shares in individual mining companies directly through your platform, just like you would share in anything else. The same is true about money.
Digging for gold
Finally, you can hope. This may sound a bit nuts, but the rise in prices in recent years has made it an increasingly popular hobby, as various people on YouTube can attest. There you’ll find endless videos of influencers happily munching on nuggets, exploring rivers, and venturing into abandoned mines. Go a little old school and spend hours watching TV shows like this. The gold rush And Alaska Gold Miners (I am a little guilty here).
You can take tours in historically fertile areas such as California, Alaska, and Australia. But gold is everywhere. In the UK you can try Cornwall, Wales and Scotland for example. The search kit is available from Amazon for just £30 ($40).
Merryn Somerset Webb is editor-in-chief of Bloomberg UK Money.
To find the author of this story:
Merryn Somerset Webb in London (email protected)
