The Transforming Role of Gold

Gold’s role in finance has changed over the years. It was once the backbone of global monetary policy, tying currencies to a specific gold standard, but now it serves primarily as a hedge.

During times of high inflation, like the late 1970s, gold prices soared while other assets suffered. However, gold has recently acted unpredictably; it stayed flat during 2022’s peak inflation but surged by 25% when interest rates climbed in 2023, showing no clear pattern with inflation or interest rates.

Today, gold’s value is up 39% from a year ago, even outpacing the S&P 500’s growth.

This rise suggests that investors may see gold as a hedge against various uncertainties rather than any single factor.

With global concerns—geopolitical issues, high deficits, and economic stability—looming, gold’s appeal may lie in its ability to protect against multiple unknowns.

Investment managers assess if traditional assets meet the goals of growth, safety, and income. While they prefer simplicity, alternative assets like gold remain under consideration when risks increase.

Investment managers continue to be cautious, carefully evaluating if and when these assets might add value to a balanced portfolio.